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NEUBERGER BERMAN
Neuberger Berman
Equity Funds -Registered Trademark-
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CENTURY FUND
FOCUS FUND
GENESIS FUND SEMI-ANNUAL REPORT
GUARDIAN FUND FEBRUARY 29, 2000
INTERNATIONAL FUND
MANHATTAN FUND
MILLENNIUM FUND
PARTNERS FUND
REGENCY FUND
SOCIALLY RESPONSIVE FUND
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TABLE OF CONTENTS
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THE FUNDS
CHAIRMAN'S LETTER A-4
PORTFOLIO COMMENTARY
Century Fund A-5
Focus Fund A-8
Genesis Fund A-11
Guardian Fund A-13
International Fund A-15
Manhattan Fund A-17
Millennium Fund A-19
Partners Fund A-22
Regency Fund A-24
Socially Responsive Fund A-26
PERFORMANCE HIGHLIGHTS B-1
FINANCIAL STATEMENTS B-4
FINANCIAL HIGHLIGHTS
PER SHARE DATA
Century Fund B-18
Focus Fund B-19
Genesis Fund B-20
Guardian Fund B-21
International Fund B-22
Manhattan Fund B-23
Millennium Fund B-24
Partners Fund B-25
Regency Fund B-26
Socially Responsive Fund B-27
THE PORTFOLIOS
SCHEDULE OF INVESTMENTS
TOP TEN EQUITY
HOLDINGS
Century Portfolio C-1
Focus Portfolio C-3
Genesis Portfolio C-5
Guardian Portfolio C-9
International Portfolio C-12
Manhattan Portfolio C-17
Millennium Portfolio C-20
Partners Portfolio C-23
Regency Portfolio C-26
Socially Responsive
Portfolio C-29
FINANCIAL STATEMENTS C-32
FINANCIAL HIGHLIGHTS
Century Portfolio C-50
Focus Portfolio C-51
Genesis Portfolio C-52
Guardian Portfolio C-53
International Portfolio C-54
Manhattan Portfolio C-55
Millennium Portfolio C-56
Partners Portfolio C-57
Regency Portfolio C-58
Socially Responsive
Portfolio C-59
DIRECTORY D-1
OFFICERS AND TRUSTEES D-2
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The "Neuberger Berman" name and logo are service marks of Neuberger Berman, LLC.
"Neuberger Berman Management Inc." and the individual fund names in this report
are either service marks or registered trademarks of Neuberger Berman Management
Inc. -C-2000
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CHAIRMAN'S LETTER April 20, 2000
Dear Fellow Shareholder,
This is my first opportunity to address shareholders as Chairman of Neuberger
Berman Equity Funds. Let me begin by thanking you for your loyalty and
appreciation of our firm's investment skills. The Neuberger Berman Funds are
committed to excellence. We understand that in the highly competitive mutual
fund industry, only those companies that serve shareholders well will prosper.
This is also the first time many of you will be introduced to Neuberger
Berman Century Fund, our latest growth stock fund offering. Managed by Brooke
Cobb, who is also Portfolio Co-Manager of the Manhattan Fund, Century is off to
a strong start. We believe that the investment discipline that has guided
Manhattan Fund to such an impressive performance record in the mid-cap growth
arena will be equally effective in the large-cap growth stock market in which
Century Fund is investing.
As you review the performance of all our domestic equity funds during this
reporting period, one thing stands out. The growth stock funds (Century,
Millennium and Manhattan) have performed appreciably better than our value funds
(Focus, Genesis, Guardian, Partners, Regency, and Socially Responsive). The
reason is simple. Growth stocks have materially outperformed value stocks across
the market capitalization spectrum during this reporting period. This does not
mean they will continue to do so indefinitely. The relative performance of
growth and value stocks has been cyclical. Throughout stock market history, they
have taken turns in the lead. It is important to realize that over the long
term, the performance of growth stocks and value stocks is almost identical.
That said, you can be sure that we strive to achieve the best possible
performance in our value funds as well as our growth funds, sticking to our
investment disciplines. We believe prudent long-term investors should maintain
portfolios with a sensible balance of funds in both categories.
In reading the fund reports, you will also note that our growth and value
fund managers have very different perspectives on today's market. This is to be
expected from portfolio managers who are passionate advocates of their
respective investment disciplines. Beauty is in the eye of the beholder,
especially in the stock market.
In closing, I look forward to serving you as Chairman of Neuberger Berman
Equity Funds. I welcome comments from shareholders on issues concerning the
funds. So, if you have something on your mind, please feel free to write me.
Sincerely,
[PETER SUNDMAN SIG]
Peter Sundman
Chairman of the Board
Neuberger Berman Equity Funds
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PORTFOLIO COMMENTARY
Neuberger Berman
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Century Fund
From inception on December 6, 1999 through February 29, 2000, Neuberger
Berman Century Fund returned 23.80% compared to the Russell 1000 Growth Index's
5.86% gain over the same time period.*
Although the Century Fund is still in its infancy, we are quite pleased with
performance during its first several months of operation. With plenty of
attractive large-cap growth stock opportunities available, we were able to get
the Fund fully invested quickly and "hit the street running." Of course in a
new, relatively small fund, it may be easier to achieve higher returns than in a
large fund. Nevertheless, we believe the Fund's good start will help attract new
shareholders and give us the chance to further demonstrate the attractive return
potential of large-cap companies with superior earnings growth prospects.
Our technology sector holdings (51.1% of total equity market value at the
close of the reporting period) led the performance parade. Our decision to focus
on smaller technology companies within the large-cap universe worked to our
advantage as tech investors gravitated down the market capitalization spectrum
looking for faster growth opportunities. In essence, we were picking off rapidly
growing mid-cap tech companies that had exploded into the large-cap category.
Within the broadly defined technology sector, portfolio holdings in
telecommunications equipment manufacturers such as Nortel and Nokia, and
semiconductor stocks including Analog Devices, Applied Materials, and Texas
Instruments were particularly rewarding. Our broadband technology investments,
most notably JDS Uniphase, also performed exceptionally well. In addition, our
approach to Internet stocks -- favoring business-to-business (B2B) companies
over e-commerce retailers -- helped buoy returns.
Our healthcare investments also generated attractive absolute and relative
returns. We avoided the major pharmaceutical companies, whose earnings have
slowed due to fewer new drug introductions, and focused on biotechnology
companies such as Genentech and Amgen, whose earnings are growing rapidly as
they bring new drugs to market.
Despite exceeding consensus earnings estimates, the performance of our
investments in retailers such as Tandy (Radio Shack), Wal-Mart, and Tiffany
disappointed. Anticipating that rising interest rates will eventually restrain
consumer spending and future earnings growth, investors rotated out of the
group. We think there could be some pleasant earnings surprises for the
retailers in the portfolio and that valuations may improve in the year ahead.
Since this is my first opportunity to address Century Fund shareholders,
allow me to briefly explain our investment discipline. If you happen to also be
a shareholder in Neuberger Berman Manhattan or Millennium Funds, my description
of our investment methodology will sound very familiar. This is not an accident.
With Neuberger Berman Century Fund, we are employing the same investment
principles and strategies in the large-cap arena that Manhattan Fund applies to
mid-cap stocks and Millennium Fund to small-cap stocks.
First and foremost, we are growth stock investors. We invest in companies
that are growing earnings faster than the market and their industry group peers.
We are biased toward companies we believe capable of consistently exceeding
consensus earnings estimates. Our research has revealed that companies that
regularly beat Wall Street
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Century Fund (Cont'd)
earnings estimates tend to be superior performers. Our focus is on growth, but
valuation does play a role in our discipline. The portfolio will very probably
have a higher price/earnings ratio than the S&P 500. However, we expect its P/E
ratio divided by 5-year projected earnings growth rate to be materially lower
than the S&P's.
At the end of this reporting period, Century Fund's portfolio clearly
demonstrates this investment methodology. The portfolio has a projected 5-year
annualized earnings growth rate of 26%, compared to the S&P 500's 9%. The
portfolio currently trades at 2 times its projected 5-year annual earnings
growth rate versus the S&P 500's 2.5 times growth rate multiple. Approximately
85% of our holdings exceeded consensus earnings forecasts (published by First
Call) in their last reported quarters, and the remaining 15% met consensus
earnings targets.
We are stock pickers, not market forecasters. However, we do feel obliged to
address shareholders' concerns regarding the stock market. Over the last year,
so-called "new economy" stocks (technology and particularly Internet-related
tech companies) have thrived while "old economy" stocks (basic materials,
industrial cyclicals, conventional retailers etc.) have suffered. Valuations
reflect this performance disparity. At present, "new economy" stocks are
perceived by some market observers to be substantially overvalued. Based on
reported earnings, we concede that price/ earnings multiples are on the high
side. However, based on future earnings prospects, we believe selected "new
economy" stocks are still priced quite reasonably. We have seen a pattern of
certain "new economy" stocks not just beating consensus earnings estimates, but
blowing them away. Wall Street analysts can't seem to raise earnings estimates
fast enough to account for actual growth. Although past performance is no
guarantee of future results, we suspect this pattern will continue for the
foreseeable future and that the technology stocks in our portfolio can continue
to deliver very attractive returns.
In closing, we are delighted that Century Fund is off to such a good start.
We believe that our investment discipline -- looking for companies with superior
earnings growth potential, the ability to exceed consensus earnings estimates,
and trading at reasonable valuations to projected earnings growth rates -- will
reward long-term investors.
Sincerely,
/s/ Brooke Cobb
Brooke Cobb
PORTFOLIO MANAGER
*This is a cumulative return and is not annualized. Because this is a new fund,
short-term results may not be duplicated. Average net assets of the Portfolio
from inception through February 29, 2000 were approximately $18.2 million.
While investment in IPOs has had a positive impact on the performance of the
fund, as the fund grows in assets, this impact will likely be diminished.
Neuberger Berman Management Inc.-Registered Trademark- ("NBMI") currently
absorbs certain expenses of the fund. Without this arrangement, the fund's
returns
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Century Fund (Cont'd)
would have been less. Past performance does not guarantee future results and
shares when redeemed may be worth more or less than original cost. The
prospectus contains a more complete discussion of the risks of investing in the
fund.
For index definitions, refer to page A-28, titled "Glossary of Indices." The
Portfolio invests in many securities not included in the indices listed.
The composition, industries and holdings of the Portfolio are subject to change.
Century Portfolio is invested in a wide array of stocks and no single holding
makes up more than a small fraction of the Portfolio's total assets.
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PORTFOLIO COMMENTARY
Neuberger Berman
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Focus Fund
For the six months ended February 29, 2000, the Focus Fund rose 21.18% while
the S&P 500 during the same time period increased 4.11%. These results are
gratifying since they occurred during a period that was difficult for the value
style of investing -- as evidenced by the 8.88% decline in the Russell 1000
Value Index for the six months ended February 29th.*
In our opinion, the primary reason for the portfolio's outperforming both the
S&P 500 and the Russell 1000 Value is its focused approach. The Portfolio is
never focused on more than six S&P sectors (it currently is focused on four),
and therefore can concentrate its investments in only those stocks where we feel
the undervaluation is greatest. In other words, we never buy a stock merely to
have representation in some area of the market; the only reason we take a
position is because we think it is attractive.
Recently there were two significant developments which affected the
portfolio, and our reaction to them provides an insight into how our investment
discipline operates. The first occurred early in 1999 when concern over Y2K
related issues reached levels that bordered on the hysterical. This created
enough selling in technology stocks in general and software stocks in particular
that we took a fairly substantial position in Compuware, Oracle, Rational
Software and Sterling Commerce. Each of these had reached valuations less than
the market, a very rare occurrence in the software industry, and their
subsequent return to their more traditional valuations helped the Fund
considerably. We also increased our exposure to the semiconductor industry at
that time, as Y2K-related fears of a slowdown in the Personal Computer industry
led to valuations which we found attractive. The ensuing recovery in Atmel,
Lattice SemiConductor, Microchip Technology and Texas Instruments increased our
performance noticeably.
While technology stocks do not often appear in most value portfolios, the
above example illustrates our discipline: When negative psychology creates
attractive valuations in an industry which we feel has above average
fundamentals, we will be aggressive in establishing sizeable positions.
The second major development has created what we believe to be an opportunity
as good as last year's in technology. This is the Fed's imposition of two
interest rate increases during this reporting period, with the prospect of one
or two more to come. Most financial stocks were beaten down as investors sold
these issues, fearful of the effect the rate increases would have. While
psychology is a powerful factor in stock valuation, over time we believe it is a
company's earning power which determines its stock price, and the fact is that
the rate increases have not slowed the earnings growth of the better financial
companies. Consider this: In the fourth quarter of last year it was leading
technology firms Dell and Lucent announcing earnings shortfalls while, despite
the steadily rising interest rates, Citigroup, Chase Manhattan, Morgan Stanley,
Capital One and Providian (all of which we own) reported substantial earnings
increases. The valuations on finance stocks have now reached levels, which,
relative to the market, are lower than they have been in decades.
One of the disciplines we have in Focus is to take advantage of broad-based
selling in an out-of-favor industry by buying only the best companies. We have
done, and continue to do this, in the case of financials. While "best" is a
subjective term, we do believe that Citigroup is the best broad-based financial
services company, Chase
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Focus Fund (Cont'd)
Manhattan is the best money center bank, Morgan Stanley the best securities
firm, Countrywide Credit the best mortgage banker and Capital One and Providian
the two best credit card companies. We firmly believe that the earnings of all
the above companies will continue to grow, and that sooner or later (hopefully
not too much later) this earning power will be reflected in their stock prices.
Recently, due to their respective valuations, we have been shifting some
funds out of technology stocks into financials. (That said, technology still
represents 34.9% of the total equity market value portfolio). We also have
established a fairly sizeable position in General Motors and have made a small
increase in our retail holdings.
The future, never easy to predict, is now more difficult than usual. The
level of the overall market, as measured by its price/earnings ratio, seems
high. This statement, while true, is somewhat misleading since today's market is
two distinct markets: the NASDAQ, which seems fairly richly valued, and
everything else, which looks pretty cheap. One of the reasons the Federal
Reserve has given for raising interest rates is to curb excess valuation in the
stock market. To date, unfortunately, the major impact of these rate increases
has been on stocks which were not overvalued to begin with. While this is
frustrating to value managers such as ourselves, we have chosen to forsake
whining about it in favor of acting on the new opportunities we see.
As of February 29th, the P/E ratio in the portfolio was 14.7 times estimated
2000 earnings. This compares with P/E ratios of 26.9 for the S&P 500 and 14.7
for the Russell 1000 Value Index. Interestingly, the consensus earnings growth
rates going forward are 19.3% for Focus, 17.9% for the S&P 500 and 12.3% for the
Russell 1000 Value. This reflects what we are trying to do: get more growth per
dollar invested than the market. While our forward P/E is 45% lower than the S&P
500 our companies projected earnings growth rate is actually 8% higher.
Similarly, while Focus' forward P/E is the same as the Russell 1000 Value, our
projected growth rate is 57% higher. We feel these numbers are compelling and
over time will produce worthwhile results.
While past results are no guarantee of the future, we would point out that
Focus Fund's performance ranks in the top 10% of all Morningstar-C- large-cap
value funds for the past year, the past three years, the last five years and the
past 10 years(1). It would seem we shouldn't alter the process now. In closing,
we remain committed to our value approach since we believe, as in fact the last
year shows, that it can produce superior results.
Sincerely,
/s/ Kent Simons
Kent Simons
PORTFOLIO MANAGER
*For index definitions, refer to page A-28, titled "Glossary of Indices." The
Portfolio invests in many securities not included in the indices listed.
A-9
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Focus Fund (Cont'd)
The composition, industries and holdings of the Portfolio are subject to change.
No single holdings of Focus Portfolio make up more than a small fraction of the
Portfolio's total assets.
While the value-oriented approach is intended to limit risks, the
Portfolio -- with its concentration in sectors -- may be more greatly affected
by any single economic, political or regulatory development than a more
diversified mutual fund.
Past performance is no guarantee of future results. Share prices will vary and
your shares, when redeemed, may be worth more or less than the price you paid
for them.
(1) -C- 2000 by Morningstar, Inc. All rights reserved. The information contained
herein is the proprietary information of Morningstar, Inc. Morningstar Inc.
shall not be responsible for investment decisions, damages or other losses
resulting from use of this information. Past performance is no guarantee of
future performance. Morningstar, Inc. has not granted consent for it to be
considered or deemed an "expert" under the Securities Act of 1933.
A-10
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PORTFOLIO COMMENTARY
Neuberger Berman
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Genesis Fund
For the six-month period concluding February 29, 2000, the Genesis Fund
gained 6.78% compared to the Russell 2000's 35.82% return over the same time
period.*
We are pleased the Fund posted respectable gains during a period that was
particularly challenging for small-cap value investors. Performance comparisons
to the Russell 2000 do not take into account the enormous discrepancy between
small-cap growth stock and small-cap value stock performance during this
reporting period. While the Genesis portfolio underperformed its official
Russell 2000 benchmark, it more than doubled the 2.82% return for the Russell
2000 Value Index.
During the last six months, technology was just about the only game in town
in the small-cap stock market. As could be expected, our technology investments
did quite well, more than doubling in value in first half fiscal 2000. However,
as a result of our value parameters, the portfolio was significantly
under-weighted in the technology sector. We like technology and recognize the
enormous growth potential of high quality tech companies. However, unless and
until the group corrects and we can find more reasonably priced technology stock
opportunities, we will likely remain under-weighted versus the Russell 2000. We
have been taking some profits in tech holdings that have moved out of legitimate
value range and using the proceeds to build positions in more reasonably priced
technology stocks. But, true tech stock bargains are becoming more scarce as
stocks in the most promising sub-sectors of the industry continue to soar.
Our energy investments, primarily small oil services companies, also
contributed to returns during this reporting period. As the price of oil
climbed, investors began anticipating increased drilling activity and bid up oil
services companies. We are now seeing signs of a pickup in drilling and believe
that better earnings going forward will continue to buoy our oil services
investments.
Our biggest performance disappointments fall into two categories: defense and
aerospace, and banking. In the case of defense and aerospace holdings, Alliant
Techsystems and Cordant Technologies, stock price declines were not due to poor
operating results, but rather fallout from the earnings problems experienced by
high profile industry leaders Raytheon, Lockheed Martin, and Boeing. We think
Alliant and Cordant can continue to grow earnings at a decent clip, and that
once the cloud over the industry passes, earn a much better appraisal from
investors.
Small bank stock holdings such as Peoples Heritage Financial and Webster
Financial Corp. were knocked down by a headwind formed by rising interest rates
and the flattening yield curve. We think current stock prices already discount
what is perceived to be a hostile economic environment for banks. In addition,
at currently depressed prices, the odds have increased that these stocks will
attract suitors when consolidation in the banking industry resumes after its Y2K
hiatus.
It has been a rather strange small-cap stock market. In view of what's been
going on in the technology and biotechnology groups, you could argue that the
best way to make money was to buy stocks that had very high price/earnings
ratios or no earnings at all. Obviously, value investors don't subscribe to this
logic. We try to find good little companies trading at valuation discounts.
We are finding a lot of such opportunities in beaten down "old economy"
companies that will be prime beneficiaries of "new economy" technologies. If
this
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Genesis Fund (Cont'd)
sounds farfetched, we would remind you that during past periods of great
technological innovation -- the railroads, the electric light, the assembly
line, the telephone -- many users of new technologies were rewarded as much or
more than the creators of the new technologies. We expect history to repeat
itself in today's "new economy."
Let us give you an example. Be advised, this should not be viewed as a
recommendation, but rather an example of our investment discipline. AAR Corp. is
a distributor of new and used aerospace parts. It serves all the major airlines
and should be able to continue to grow its basic business nicely as airlines
outsource more of their replacement parts operations. AAR is not a technology
resistant dinosaur. It already has sophisticated computer systems that help it
procure parts on demand, trace the history of used parts (required by the FAA),
manage inventories, and efficiently fulfill orders.
AAR also has an exciting new business. It is a 50% joint venture partner with
the major airlines in an aerospace parts procurement and distribution
cooperative called SITA. SITA is going on-line. Costs should go down for
everyone involved and profits should rise.
While some of the original equipment manufacturers have teamed up to form
on-line buying groups, none have the used parts expertise or sophisticated
computer tracking ability of AAR. This should not be underestimated, as the size
of the aerospace used parts market dwarfs that of the new parts market.
You can buy this "old economy" company poised to exploit "new economy"
technologies for just 11.5 times projected calendar 2000 earnings. At some time
in the future, AAR's share of SITA could be spun off to shareholders. In view of
the valuations currently being given to business-to-business (B2B) e-commerce
networks, this seems likely to be a very big bonus.
In closing, growth is still in and value is still out. What will change this?
Perhaps the combination of investors realizing that severely depressed "old
economy" stocks can survive and prosper in the "new economy", and recognition
that valuations for many high flying "new economy" stocks defy economic gravity.
We will continue to seek out quality small-cap companies trading at reasonable
valuations relative to above average growth prospects. Call us tortoises to the
small-cap growth stock hares. We hope our shareholders will accompany us in the
race for long-term investment profits.
Sincerely,
/s/ Judith Vale /s/ Robert D'Alelio
Judith Vale and Robert D'Alelio
PORTFOLIO CO-MANAGERS
*For index definitions, refer to page A-28, titled "Glossary of Indices." The
Portfolio invests in many securities not included in the indices listed.
The composition, industries and holdings of the Portfolio are subject to
change. Genesis Portfolio is invested in a wide array of stocks and no single
holding makes up more than a small fraction of the Portfolio's total assets.
The risks involved in seeking capital appreciation from investments primarily
in companies with small market capitalization are set forth in the prospectus.
Past performance is no guarantee of future results.
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PORTFOLIO COMMENTARY
Neuberger Berman
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Guardian Fund
For the six month period concluding February 29, 2000, the Guardian Fund
declined 2.67% versus the Russell 1000 Value Index's 8.88% loss over the same
time period. The S&P 500 advanced 4.11% over the corresponding six-month
period.*
Technology was the big story in the market and in the Guardian Portfolio in
the first half of fiscal 2000. Of the 11 sectors in the Russell 1000 Value
Index, technology was the only sector to deliver positive returns. We were
substantially over-weighted in technology versus the benchmark and enjoyed a
return in excess of 50% from our tech investments during this reporting period.
We don't believe owning technology stocks is inconsistent with a value
discipline. The technology sector is relatively volatile and periodically offers
exceptional value oriented opportunities. We tend to buy technology stocks when
they are out-of-favor and trading at low price/earnings ratios relative to
earnings growth rates. Many of our big tech winners during this reporting period
were originally purchased in the summer and fall of 1998 when the group sold off
sharply in response to global economic and financial market turmoil. Obviously,
valuations have risen substantially since then. We have been consistently
trimming and/or eliminating positions in more fully valued technology stocks. If
the group continues to soar, we will probably do some more paring. However, we
are willing to let some of our tech winners run until valuations get out of line
or we see signs of slowing earnings.
With the exception of brokerage/asset management companies (most notably
Morgan Stanley Dean Witter, which made our "Top Ten" contributors' list),
financial services stocks were among our biggest portfolio disappointments. In
general, financial services stocks were hit hard by four factors: higher
interest rates and the prospect of additional Federal Reserve rate hikes; some
high profile earnings shortfalls; disappointing top line revenue growth; and the
fear that the credit quality of loan portfolios would deteriorate if the Fed
tightens too aggressively and sends the economy into recession.
We are concerned by overcapacity in the financial services industry and the
difficulty many companies are having growing revenues in a very competitive
environment. Also, if interest rates continue to climb, earnings could suffer.
However, we think almost all the potential bad news is already baked into
financial services stock prices. If the Fed once again manages to successfully
pilot the economy to a "soft landing," the cloud currently overhanging financial
services stocks should dissipate.
In general, we believe that the market has unfairly penalized "old economy"
stocks in the so-called new economy. Consider the joint venture taking form
among General Motors, Daimler Chrysler, and Ford. Oracle and i2 Technologies are
building a business-to-business e-commerce network to allow these auto giants to
procure parts over the Internet. It is estimated that efficiencies realized
through this network could allow the auto makers to shave $2,000-$3,000 off the
cost of building a car. Of course, all this cost saving won't go into their
pockets -- it will be competed away in the marketplace. Under this scenario, as
the price of cars comes down, demand is expected to increase, and the auto
makers' revenues and profits would then grow substantially. Oracle and i2
Technologies would make money building and operating the network, but, the auto
companies would own this incredibly valuable asset. This appears to be a win/win
situation for these "old economy" car companies. Yet, in today's market, you can
buy GM and Ford for less than ten times earnings, whereas Oracle is going for
more than 75 times earnings.
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Guardian Fund (Cont'd)
Does it make sense to ignore value and chase growth at any price? In our
opinion, value stocks have three powerful forces currently working in their
favor. The first is good operating results. Earnings are coming through. In
general, value stocks haven't declined because earnings have fallen. It's been
contracting price/earnings ratios (largely a measure of investor perception)
that have resulted in the decline. Secondly, the value sector of the market is
by historical standards quite cheap. One hundred and seventy-eight of the 500
stocks in the S&P and 336 stocks out of the 1,000 stocks in the Russell 1000
have P/Es of 10 or less. Compare this to the Internet sector where the average
price/sales multiple for 226 stocks is 30. Why don't we mention the P/E of this
group? Because collectively these companies are losing $8 billion a year!
Finally, we believe smart money is moving into the value sector. Merger
activity is strong as corporate buyers snap up stock market bargains. Deals are
getting done at very substantial premiums to market prices. Mirage just accepted
a $21 per share offer from MGM Grand. It was trading around $10 before MGM came
calling. Leveraged buyouts (LBO's) are back in vogue. Recently, the management
of Manor Care announced a bid to take the company private. In fourth quarter
1999, $40 billion of planned share repurchases were announced, up from
$25 billion in the third quarter. When stocks get too cheap relative to economic
value, they attract the attention of informed industrialists like corporate
acquirers and corporate managements, and eventually, the attention of investors.
In closing, as evidenced by the poor performance of value stock benchmarks,
it has been another challenging period for us. We are never pleased when the
Fund declines. However, the Fund's modest retreat compared to its benchmark
index's substantial loss indicates we effectively executed on our value
strategies. More importantly, we believe the stage is set for a value stock
revival, which should help us improve returns.
Sincerely,
/s/ Kevin Risen /s/ Rick White
Kevin Risen and Rick White
PORTFOLIO CO-MANAGERS
*For index definitions, refer to page A-28, titled "Glossary of Indices." The
Portfolio invests in many securities not included in the indices listed.
The composition, industries and holdings of the Portfolio are subject to
change. Guardian Portfolio is invested in a wide array of stocks and no single
holding makes up more than a small fraction of the Portfolio's total assets.
Past performance is no guarantee of future results.
The investments for the Portfolio are managed by the same portfolio manager(s)
who manage one or more other mutual funds that have similar names, investment
objectives and investment styles as the Portfolio. You should be aware that the
Portfolio is likely to differ from the other mutual funds in size, cash flow
pattern and tax matters. Accordingly, the holdings and performance of the
Portfolio can be expected to vary from those of the other mutual funds.
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PORTFOLIO COMMENTARY
Neuberger Berman
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International Fund
For the fiscal six-month period ended February 29, 2000, the International
Fund returned 60.68% versus the MSCI EAFE Index's return of 13.77% for the same
period. Needless to say, the last six months have been extremely rewarding for
international investing.*
The portfolio is currently diversified across 23 countries with the following
regional allocation(1).
<TABLE>
<CAPTION>
NEUBERGER BERMAN
INTERNATIONAL PORTFOLIO MSCI EAFE INDEX
<S> <C> <C>
- --------------------------------------------------------------------------------------
Continental Europe 34.3% 48.4%
United Kingdom 13.9% 19.1%
Japan 30.0% 26.7%
Pacific Basin Ex Japan 10.8% 5.8%
Latin America 0.2% 0.0%
Other Markets 2 2.9% 0.0%
</TABLE>
Our asset allocation has not changed dramatically during the last six months.
We are still overweight in the Pacific Basin region (including a modest
overweight in Japan), and underweight in Continental Europe and the United
Kingdom. We also continue to have a very low exposure to emerging equity markets
outside of the Pacific Basin. Roughly 5% of our performance during the past six
months is attributable to the allocation process. As an example, we were
rewarded by our overweight in Finland (a country where both the market and our
investments posted strong returns) as well as our underweight in the United
Kingdom and Switzerland (markets that experienced negative returns for the
period but where our investments delivered spectacular returns). On a regional
basis, the performance of the past six months was largely from Western Europe
followed closely by the Pacific Basin. At the country level our top performers,
in order of contribution, were Japan, the United Kingdom, Finland, France,
Singapore, and Denmark.
The lion's share (approximately 90%) of our performance over the period came
from security selection. Our largest sector commitments as of February 29, 2000
are Information Technology (37.7% of total equity market value),
Telecommunications (15.8% of total equity market value), Consumer Discretionary
(9.7% of total equity market value), Financials (9.1% of total equity market
value), and Industrials (8.4% of total equity market value). You will note that
the themes driving our investment strategy are the same as at the beginning of
the period. However, while the same themes continue to dominate we have made
changes in weightings -- the most notable change over the past six months being
our increased exposure to the technology sector. We currently overweight our
benchmark (the EAFE) by 23.2%, which is primarily due to our investments in the
"Software & Services" industry where we have 22.2% of the portfolio versus
EAFE's weight of 3.8%. At the same time we modestly reduced our
telecommunications holdings (which was our largest sector in
1) Regions listed total 92.10% of the Portfolio's total net assets
2) Bermuda, Canada & Russia
A-15
<PAGE>
- ----------------------------------------------------------------------
International Fund (Cont'd)
August) and are now slightly underweight the benchmark weight of 16.5%.
Banking & Financials and Pharmaceuticals are also areas where we have reduced
our exposures in favor of better opportunities.
The top five performing securities over the past six months were Softbank
Corp. (Japan), Yahoo Japan Corp. (Japan), Datacraft Asia (Singapore), Thomson
MultiMedia ADR (France), and The Sage Group (United Kingdom). These top
performing names are all technology stocks. Softbank Corp. and Yahoo Japan are
both businesses in the software & services industry. Softbank is essentially a
holding company and is one of the world's largest internet-related
conglomerates, with investments in over 60 companies. Yahoo Japan is an Internet
access provider. Datacraft Asia is currently Asia's leading data communications
and network systems integrator. Thomson, a French consumer electronics
manufacturer, sells its products in Europe, Asia and the Americas. The Sage
Group, a software publishing company, develops, publishes and distributes
accounting and payroll software for personal computer systems.
Although there are no guarantees, our outlook is optimistic. We feel the
current global economic climate will continue to provide a stable backdrop for
international investing. We also feel that key themes going forward will
continue to be deregulation (particularly for the telecommunication and
financial services companies in Europe) and technology spending (as the rest of
the world catches up with the U.S.) We will remain flexible in our regional
allocation as market conditions warrant and we will continue to invest
selectively on a security by security basis.
Sincerely,
/s/ Valerie Chang
Valerie Chang
PORTFOLIO MANAGER
*For index definitions, refer to page A-28, titled "Glossary of Indices." The
Portfolio invests in many securities not included in the indices listed.
The composition, industries and holdings of the Portfolio are subject to
change. International Portfolio is invested in a wide array of stocks and no
single holding makes up more than a small fraction of the Portfolio's total
assets.
Investing in foreign securities involves greater risks than investing in
securities of U.S. issuers, including currency fluctuations, interest rates and
political conditions. In an attempt to reduce overall volatility, Neuberger
Berman Management Inc. diversifies the portfolio holdings over a wide array of
countries and individual stocks.
Past performance is no guarantee of future results.
A-16
<PAGE>
PORTFOLIO COMMENTARY
Neuberger Berman
- ----------------------------------------------------------------------
Manhattan Fund
For the six-month period ending February 29, 2000, the Manhattan Fund gained
90.04% compared to the Russell Midcap Growth Index's 67.32% return over the same
time period.*
For the last several years, we have bemoaned the fact that investors were
lavishing attention on large-cap growth stocks and paying lesser tribute to
faster growth mid-cap companies. We couldn't comprehend why mid-caps had lower
price/earnings ratios despite significantly higher earnings growth rates. As
evidenced by the Russell Midcap Growth Index's 67.32% return versus the
large-cap Russell 1000 Growth Index's 22.48% gain over this six-month reporting
period, investors appear to have caught on. Does mid-cap stocks' out-performance
over the last six months signal a reversal in trend? We can't be sure. The
valuation gap between large-cap and mid-cap growth stocks has narrowed. However,
considering mid-cap growth stocks' materially higher earnings growth rates, they
still look to us quite attractive relative to their large-cap counterparts.
Our technology and technology related holdings (approximately 65% of the
portfolio total equity market value at the close of this reporting period),
fueled performance in first-half fiscal 2000. Our "Top Ten" contributors' list
was dominated by technology stocks, with companies such as Citrix Systems, JDS
Uniphase, Veritas Software and PMC Sierra delivering 250% or better returns. We
were in the right places -- telecommunications equipment, broadband technology,
and business-to-business (B2B) e-commerce companies -- and avoided some of the
technology potholes like computer hardware and e-commerce retailers.
Of course, the spectacular performance of the technology sector over the last
six months has inspired some concern that tech stocks are now overvalued and
vulnerable to a substantial correction. Based on reported operating results, we
concede that many tech companies are now rather richly priced. However, we
believe investors may actually be underestimating the exceptional growth
potential of many quality mid-cap technology companies. Over the last year or
so, reported revenue and/or earnings growth has not been just running ahead of
consensus estimates. It has been leaving analysts' forecasts in the dust. Wall
Street can't raise estimates fast enough to keep pace with this explosive
growth. For the foreseeable future, we expect this pattern to continue. We are
mindful of the valuations of the tech stocks in our portfolio and consistently
trim and/or eliminate positions in stocks that we feel are getting too far ahead
of themselves or may be less likely to beat fundamental expectations going
forward. However, we think there are still technology companies well positioned
in the most dynamic sectors of the industry.
Returning to portfolio specifics, our healthcare (primarily biotechnology
companies), communications services, and capital goods investments also
contributed to returns during this reporting period. Our holdings in the retail
industry of the consumer cyclical sector disappointed. Retailers such as
Williams Sonoma (kitchen equipment), TJXCompanies (apparel), Best Buy and Tandy
(consumer electronics), and Abercrombie & Fitch (specialty items) all declined
substantially. The consensus appears to be that rising interest rates will
eventually restrain consumer spending and retailers' earnings. While we don't
argue with this economic logic, we note that the American consumer is still
buying. Most, albeit not all, of our retailer holdings met earnings expectations
during their most recent reporting periods. With consensus estimates being
revised downward, we expect some pleasant earnings surprises going forward.
A-17
<PAGE>
- ----------------------------------------------------------------------
Manhattan Fund (Cont'd)
The Manhattan Portfolio clearly displays the fundamental characteristics
inherent in our investment discipline. At the close of this reporting period,
the portfolio has a projected 5-year earnings growth rate of 39%, compared to
the Russell Midcap Growth Index's 33%. Its price/earnings ratio divided by
5-year projected earnings growth rate is modestly higher than the Index's (1.2
to 0.9), largely the result of some of our Internet investments that have yet to
turn explosive revenue growth into what we believe will be impressive earnings
gains.
This leads us to another issue that requires some discussion. We are in an
era of almost unprecedented technological innovation. Today, promising young
technology companies are growing faster than ever before and are entering the
mid-cap arena at an earlier stage of development. For a variety of reasons
ranging from aggressive advertising to gain market share, to acquisitions of
promising smaller companies and/ or the depreciation of infrastructure
investments, these companies do not yet have net earnings. Rather than
eliminating these companies from consideration and, in the process, missing out
on some of what we believe are the very best long term opportunities in the
mid-cap growth arena, we have increased our focus on revenue and cash flow
growth in addition to earnings growth. We are carefully evaluating business
models and future profit margin assumptions. If we are convinced that rapidly
growing revenues and cash flows will eventually translate into superior earnings
growth, and can identify stocks with valuations in line with future earnings
prospects, we will add them to the portfolio.
In closing, we are pleased to have delivered attractive absolute and relative
returns during this reporting period and we will be working diligently to build
on our success in the year ahead.
Sincerely,
/s/ Jennifer Silver /s/ Brooke Cobb
Jennifer Silver and Brooke Cobb
PORTFOLIO CO-MANAGERS
*For index definitions, refer to page A-28, titled "Glossary of Indices." The
Portfolio invests in many securities not included in the indices listed.
The composition, industries and holdings of the Portfolio are subject to
change. Manhattan Portfolio is invested in a wide array of stocks and no single
holding makes up more than a small fraction of the Portfolio's total assets.
Past performance is no guarantee of future results.
The investments for the Portfolio are managed by the same portfolio manager(s)
who manage one or more other mutual funds that have similar names, investment
objectives and investment styles as the Portfolio. You should be aware that the
Portfolio is likely to differ from the other mutual funds in size, cash flow
pattern and tax matters. Accordingly, the holdings and performance of the
Portfolio can be expected to vary from those of the other mutual funds.
A-18
<PAGE>
PORTFOLIO COMMENTARY
Neuberger Berman
- ----------------------------------------------------------------------
Millennium Fund
For the six-month period ended February 29, 2000, the Millennium Fund
returned 126.55% compared to the Russell 2000 Growth and Russell 2000 Index's
66.04% and 35.82% gain over the same time period, respectively.*
We've enjoyed a vibrant small-cap growth stock market ever since the
Portfolio commenced operations on October 20, 1998. We have also materially
outperformed our benchmark index since inception. So, we've been both lucky and
good. The market won't always be so cooperative. However, we believe our
investment discipline -- investing in small, fast growing companies capable of
consistently beating consensus earnings expectations and trading at reasonable
valuations relative to growth rates -- will continue to demonstrate its
effectiveness.
Our technology stock holdings (58.3% of total equity market value at the
close of this reporting period), performed exceptionally well and were
responsible for about 75% of the Fund's total return. However, technology was
not the whole story. Ten of the 11 sectors represented in the portfolio posted
positive returns, compared to gains in just 6 of these 11 sectors for the
Russell 2000. We also outperformed our benchmark, the Russell 2000 Growth index
in 9 of the 11 sectors. We are almost as pleased with the strong gains of
portfolio companies in poor performing groups such as basic materials, financial
services, energy, consumer cyclicals and consumer staples as we are with our
many technology stock winners.
We were often in the right place at the right time in the technology sector
and technology related companies. Our investments in broadband companies such as
Osicom Technologies and Efficient Networks performed exceptionally well as
investors acknowledged the explosive growth potential of companies with
technologies to expand the data carrying capacity of fiber optic and traditional
copper wire communications networks. Internet direct marketing company Mypoints
Communications was also a big winner. Mypoints is an "opt in" e-mail company.
Internet users fill out a demographic profile of themselves for Mypoints.
Mypoints then sends the appropriate advertising to them via e-mail and gives
them points toward gift certificates or discounts as they respond to the ads.
It's the "new economy" version of the old S&H Green Stamps, and we believe a
potentially lucrative business. We also scored performance points with
Netegrity, an Internet infrastructure software firm supporting e-commerce
business-to-business (B2B) and retail networks.
Retailers were our primary portfolio disappointments. Children's Place Retail
Stores and Rex Stores fell short of expectations, and in keeping with the Fund's
sell discipline, were quickly eliminated from the portfolio. American Eagle
Outfitters also declined sharply, despite posting better than expected earnings.
We continue to hold this innovative specialty retailer. In general, investors
appear convinced that rising interest rates will put an end to American
consumers' spending spree. We think higher rates will eventually restrain
consumer spending somewhat, but that selected retailers, particularly those with
well-conceived e-tail strategies, can continue to grow earnings at an attractive
pace. We are expecting our current holdings in the retail sector to exceed
consensus earnings forecasts in the year ahead.
We are stock pickers, not economists or market forecasters. However, we will
periodically comment on broader investment issues that concern shareholders and
may have an impact on our portfolio. The strong performance of technology, and
particularly, Internet-related stocks, coupled with the poor absolute and
relative
A-19
<PAGE>
- ----------------------------------------------------------------------
Millennium Fund (Cont'd)
performance of most other industry groups has inspired the financial press to
divide the market into "old economy" and "new economy" companies. Despite our
portfolio's bias to technology and its excellent returns from this sector, we
are not of the opinion that all "old economy" companies are worthless and that
all "new economy" companies are priceless. We think some companies in the former
category are legitimate growth stock bargains and some stocks in the latter
category are wildly overvalued. That's why we take profits in "new economy"
stocks, whose valuations become excessive, and look for more reasonably priced
growth opportunities, including stocks in more traditional businesses.
Investors should heed the distinction between companies that are embracing
new technologies and those that are sticking their heads in the sand. The
Internet is taking friction out of the economy -- the friction caused by forms
having to be filled out, paper shuffled, checks written, and currency changing
hands. We believe that "old economy" companies that can cut costs and improve
productivity by using new technologies like the Internet will thrive. Those who
don't will eventually be overwhelmed by the competition.
We also believe it is a mistake to underestimate the ultimate investment
potential of "new economy" companies. Some market observers are describing
investors' current infatuation with small-cap technology stocks as a mania. In
some instances they may be right. But, every day, we are finding and investing
in small companies with technologies that could have a major impact on the
American economy. Not all are earning money, and by traditional measures like
price/earnings ratios or multiples to revenues, some appear absurdly priced.
However, some of these are real companies with real businesses that we expect
will eventually produce real earnings. Most importantly, they have the real
potential to provide outstanding long-term investment returns.
In closing, we are pleased the Fund delivered such generous returns to
shareholders during first half-fiscal 2000. We trust that shareholders won't
expect this kind of performance every six months. Recent returns were achieved
during very favorable market conditions, which are unlikely to be sustained.
However, we remain confident that our investment discipline can continue to
generate attractive long-term returns.
Sincerely,
/s/ Michael Malouf /s/ Jennifer Silver
Michael Malouf and Jennifer Silver
PORTFOLIO CO-MANAGERS
A-20
<PAGE>
- ----------------------------------------------------------------------
Millennium Fund (Cont'd)
*The start up of Millennium Fund roughly coincided with a period of accelerated
growth in the small-cap growth sector of the stock market, and its investment
in IPOs had a significant impact on performance. There can be no assurance that
these factors will continue to have a positive effect on the fund. And since
the fund is relatively small in asset size, it may be easier to achieve higher
returns than in a larger fund. NBMI currently absorbs certain expenses of the
fund. This arrangement is subject to change, and without this arrangement, the
fund's returns would have been less. Results are shown on a "total return"
basis and include reinvestment of all dividends and capital gains
distributions. Performance data quoted represents past performance, which is no
guarantee of future results. The investment return and principal value of an
investment will fluctuate so that the shares, when redeemed, may be worth more
or less than their original cost.
For index definitions, refer to page A-28, titled "Glossary of Indices." The
Portfolio invests in many securities not included in the indices listed.
The composition, industries and holdings of the Portfolio are subject to change.
Millennium Portfolio is invested in a wide array of stocks and no single holding
makes up more than a small fraction of the Portfolio's total assets.
Past performance is no guarantee of future results.
The risks involved in seeking capital appreciation from investments primarily in
companies with small market capitalization are set forth in the prospectus.
A-21
<PAGE>
PORTFOLIO COMMENTARY
Neuberger Berman
- ----------------------------------------------------------------------
Partners Fund
For the six-month period concluding February 29, 2000, the Partners Fund
declined 3.28% versus the Russell 1000 Value Index's 8.88% loss over the same
time period. The S&P 500 advanced 4.11% over the corresponding six-month
period.*
We are always disappointed when the Fund fails to generate a positive return.
On a relative return basis, we had a reasonably good year versus our Russell
1000 Value Index benchmark and a rather poor year compared to the S&P 500.
Market trends will always have some impact on portfolio performance. However,
when the market is clearly biased to one investment style or favors just a few
stocks or industry groups, it will have an even greater impact on portfolio
returns.
Over the last year, we have experienced an increasingly narrow market. In
calendar 1999, the top 25 stocks (predominantly rather richly valued growth
stocks) were responsible for 87% of the S&P 500's 21.04% return. While we do not
yet have the data for this reporting period, we expect to see the same
pattern -- a relative handful of big winners buoy the indices, while the
majority of component stocks languish.
It has also been a one-industry-group stock market. During this six-month
reporting period, 10 of the 11 sectors in the Russell 1000 Value Index declined.
Technology was the only group in the Index that posted a gain. Since technology
stocks generally trade at valuation premiums, this was a particularly
challenging period for value investors.
We participated in the tech sector. In fact, at the close of this reporting
period, technology stocks comprised approximately 21% of the Portfolio's total
equity market value. We were able to buy tech stocks such as Ericsson, GM Hughes
Electronics, and Motorola at opportunistic prices when each of these companies
suffered temporary setbacks in 1999. These stocks were excellent performers for
us over the last six months. We were overweighted in technology compared to the
Russell 1000 Value Index and were under-weighted compared to the S&P 500. This
explains why the Fund outperformed the former and underperformed the latter.
While by far our best performing group, technology was not the only bright
spot in the portfolio. On average, our consumer cyclical investments generated
attractive returns. Our investments in interest rate sensitive groups like basic
materials, capital goods, and financial services suffered. The consensus seems
to be that an aggressive Federal Reserve may cause the economy to decelerate too
fast and perhaps even slip into recession. We don't agree. We think that the Fed
can once again successfully engineer a "soft landing" that will sustain economic
growth, albeit at a less torrid pace than we have seen over the last year. If we
are right, many of the stocks in beaten down industry groups have "double play"
potential -- the prospect of better than anticipated earnings and rising
price/earnings multiples.
Perhaps even more disturbing than the narrowness of the market, was the
tendency for investors to chase returns. Fundamentals forgotten, investors
abandoned stocks that weren't moving and flocked to those that were going up in
price. This kind of stock price momentum investing has resulted in some absurdly
low and ludicrously high valuations.
For example, on a recent research outing we met with Maytag, a high quality
industrial cyclical with a pristine balance sheet, strong free cash flow, and an
excellent long-term record of delivering high financial returns. That same day,
we met with Infospace, a 3-year-old company with a promising cellular
telephone/Internet portal business. Over the next few years, we believe Maytag
can grow revenues by 3-5% and
A-22
<PAGE>
- ----------------------------------------------------------------------
Partners Fund (Cont'd)
earnings by 10-15% annually. Infospace's revenues have been growing by 100%
annually and we believe if everything goes according to management's plan, the
company can go on to become very profitable. But, Infospace doesn't have any
earnings yet, and management is telling analysts that it may take 3 more years
to show a profit.
We think it is fair to characterize Maytag and Infospace as good companies.
At current valuations, we would call only one of them a good investment. Maytag
trades at 6 times earnings and at just 50% of revenues. In our opinion, it is an
outstanding investment bargain. Infospace stock has gone from its January 1999
offering price of $9 7/8 to a high of $264 per share and currently trades at 230
times revenues. This is much too rich for our blood.
As is our custom, we will briefly describe a portfolio holding that
demonstrates our value discipline. This should not be considered a
recommendation and we may change our opinion and sell the stock if circumstances
warrant it. After acquiring the Fred Meyers chain, Kroger is now the second
largest supermarket company in America. Economies of scale on the purchasing
front and Kroger's ability to increase the percentage sales of higher margin
private label products in the Fred Meyers stores, should improve profit margins
significantly in the years ahead. Over the last year, Kroger stock has gone from
a high of $35 to $14 per share and its P/E has collapsed from 22 to 15. We
believe Kroger can grow revenues by about 7% and earnings by 16-18% in the
coming year. In essence you are getting Kroger for less than one times its
projected annual earnings growth rate. We think that is a very low valuation for
a company in a stable business like groceries.
In closing, it's been another tough period for value investors. We can't
predict when the market will begin valuing businesses more appropriately. We
believe our portfolio is full of high quality, undervalued companies that will
see much better days in the years ahead.
Sincerely,
/s/ S. Basu Mullick /s/ Robert Gendelman
S. Basu Mullick and Robert Gendelman
PORTFOLIO CO-MANAGERS
*For index definitions, refer to page A-28, titled "Glossary of Indices." The
Portfolio invests in many securities not included in the indices listed.
The composition, industries and holdings of the Portfolio are subject to
change. Partners Portfolio is invested in a wide array of stocks and no single
holding makes up more than a small fraction of the Portfolio's total assets.
Past performance is no guarantee of future results.
The investments for the Portfolio are managed by the same portfolio manager(s)
who manage one or more other mutual funds that have similar names, investment
objectives and investment styles as the Portfolio. You should be aware that the
Portfolio is likely to differ from the other mutual funds in size, cash flow
pattern and tax matters. Accordingly, the holdings and performance of the
Portfolio can be expected to vary from those of the other mutual funds.
A-23
<PAGE>
PORTFOLIO COMMENTARY
Neuberger Berman
- ----------------------------------------------------------------------
Regency Fund
For the six-month period ended February 29, 2000, the Regency Fund gained
12.35% versus a 11.25% loss for the Russell Midcap Value Index.*
We are pleased to have posted positive gains during a period in which our
benchmark index declined significantly. Our technology investments deserve much
of the credit. We were substantially over-weighted in technology, and enjoyed
excellent returns from stocks such as Comdisco, Cabletron, American Tower,
National Semiconductor, and Parametric Technology -- all of which we were able
to buy at opportunistic prices when they fell out of favor in 1999. Performance
also benefited from strong gains in our communications services investments. Our
stock picking prowess was demonstrated by the fact that the Fund had positive
returns in six of the 11 sectors represented in the portfolio compared to
benchmark index gains in just two of these 11 sectors.
Our primary disappointments came from portfolio companies in interest rate
sensitive sectors including basic materials, capital goods, and financial
services. Judging by the historically low valuations of companies in these
sectors, the consensus seems to be that an aggressive Federal Reserve will step
too hard on the monetary brakes and push the economy into recession. We expect
rising interest rates to eventually slow the economy and we may be seeing peak
earnings for some companies in interest rate sensitive sectors. However, we
think the economy is headed for a "soft landing," not a recession. Consequently,
we believe earnings for severely depressed interest rate sensitive stocks may be
better than expected and that these stocks could get an additional boost if
price/earnings multiples expand to more normalized levels.
While we have enjoyed a good first half of fiscal 2000, we are concerned by
some of the things happening in the market. Investors appear to be ignoring
valuations and buying stocks simply because they are going up in price. We are
seeing stocks of very good companies sinking like stones despite favorable
operating results. Concurrently, hot stocks are taking off like rockets, and
regardless of whether they are companies with real potential or just business
plans supported by imaginative public relations efforts, some are now trading at
astronomical valuations. We believe this doesn't make economic sense and
ultimately stock prices will have a rational relationship to the underlying
companies' quantifiable economic value.
The financial press has rather arbitrarily divided the market into "old
economy" and "new economy" stocks. The former are perceived, and priced in the
market, like endangered species. The latter are worshiped and priced as if
nothing will ever go wrong. In our opinion, this is rather foolish. There are
many "old economy" companies that are embracing new productivity enhancing
technologies and have or are rapidly developing Internet strategies. We believe
many will succeed in the "new economy" and eventually gain the respect and
admiration of investors. Conversely, there are numerous "new economy" companies
that will prove to be more sizzle than substance.
The good news is that we think there are still plenty of outstanding values
in the market. Let us give you an example. Be advised this is not a
recommendation, and that if fundamentals deteriorate, we may sell this or any
other portfolio company mentioned in this report. Comdisco is a computer leasing
company that has successfully expanded into several other promising businesses.
Comdisco now offers "disaster recovery" data storage for large companies. This
profitable business is growing quite
A-24
<PAGE>
- ----------------------------------------------------------------------
Regency Fund (Cont'd)
nicely. In addition, Comdisco has a division which leases computers to start-up
companies and gets paid in cash and stock options. In essence, this has
developed into an interesting little venture capital business. Some of these
start-ups have become very big companies in exciting growth businesses and
Comdisco will highlight the value of these investments in a tracking stock later
this year. Comdisco will also be doing a partial spin-off of a broadband
technology company called Prism. Comdisco is not particularly cheap on a
price/earnings basis. However, we think the sum of the value of its parts is
worth considerably more than the current market price of the whole.
In closing, we are pleased the Fund provided good returns during a
challenging period for mid-cap value investors, noting that it may be easier to
achieve higher returns in a relatively small fund than a larger one. We can't
predict what the stock market has in store for us in the year ahead. We are
confident that our value-oriented approach to the mid-cap stock market can
deliver attractive long-term investment returns.
Sincerely,
/s/ Robert Gendelman /s/ S. Basu Mullick
Robert Gendelman and S. Basu Mullick
PORTFOLIO CO-MANAGERS
*These are cumulative returns and are not annualized. Because this is a new
fund, short-term results may not be duplicated. Average net assets of the
Portfolio through February 29, 2000 were approximately $21.6 million. In
particular, IPO's had a significant impact on the performance of the Fund.
Neuberger Berman Management Inc.-Registered Trademark- ("NBMI") currently
absorbs certain expenses of the Fund. Without this arrangement, the Fund's
returns would have been less. Past performance does not guarantee future
results and shares when redeemed may be worth more or less than original cost.
The risks involved in seeking capital appreciation from investments primarily
in companies with medium market capitalization are set forth in the prospectus.
For index definitions, refer to page A-28, titled "Glossary of Indices." The
Portfolio invests in many securities not included in the indices listed.
The composition, industries and holdings of the Portfolio are subject to change.
Regency Portfolio is invested in a wide array of stocks and no single holding
makes up more than a small fraction of the Portfolio's total assets.
Past performance is no guarantee of future results.
A-25
<PAGE>
PORTFOLIO COMMENTARY
Neuberger Berman
- ----------------------------------------------------------------------
Socially Responsive Fund
For the six-month period concluding February 29, 2000, the Socially
Responsive Fund declined 9.68% compared to the Russell 1000 Value Index's 8.88%
loss. The Standard & Poor's 500 Index gained 4.11% over the same time period.*
Technology stocks held center stage during the first half of fiscal 2000.
But, not all technology stocks got rave reviews. Computer hardware companies
were panned, last year's biggest stars (e-commerce retailers) lost their
investment audience, and some of the leading software companies took second
billing. The loudest cheers went to semiconductor manufacturers,
telecommunications equipment companies, and business-to-business (B2B)
e-commerce networks. Although we were overweighted in technology, we owned too
few of the rising stars. Portfolio performance was helped by strong gains from
Hewlett Packard and Intel, but hurt by sharp declines in Xerox and Unisys.
Collectively, our investments in the technology sector posted a modest decline.
Energy and healthcare were the two top contributing sectors in the portfolio.
Our oil services holdings, most notably Cooper Cameron, performed quite well and
helped us achieve positive gains in the poor performing energy sector. Our
biotechnology holdings, highlighted by Biogen's strong performance, also buoyed
returns in a healthcare sector that was hard hit during this reporting period.
Our holdings in interest rate sensitive sectors like basic materials, capital
goods, consumer cyclicals, and financial services disappointed. This was not
generally a result of earnings shortfalls -- profits in these sectors remained
relatively strong. It was more a function of investors' concern that future
earnings are jeopardized by rising interest rates and the prospect of a
considerably less robust economy. These are reasonable concerns. The Federal
Reserve appears committed to slowing the economy and cyclical company earnings
may be peaking. However, cyclical stocks are now priced as if a recession is
just around the corner. We don't think that's likely to happen. In fact, we
believe earnings will be better than anticipated and that these stocks should be
given materially higher valuations.
It has been a very narrow market, with a small percentage of stocks
(primarily in the hot technology sectors), posting spectacular gains and the
majority of stocks languishing or retreating. It has also been an unforgiving
market. For example, Unisys, in our opinion a great company doing all the right
things to improve long-term profitability, lost nearly 30% of its market value
over the last six months for reporting a Y2K oriented revenue shortfall. Tyco,
another portfolio holding with an exceptional track record, lost 25% of its
market value after a newsletter writer criticized its merger accounting methods.
We've reviewed Tyco's accounting procedures and in our opinion, they conform to
accepted principles. This market has bedeviled investors in some very good
companies. But, long-term investors must have patience and we think our patience
with these stocks will be rewarded.
Finally, we are concerned that investors are succumbing to the lure of
instant riches in what is being touted as a new investment era. "New" is fast
becoming the most overused word in everyone's investment vocabulary. The
financial press is trumpeting promising new technologies being developed by "new
economy" companies, and the "new paradigm" has replaced time honored investment
principles. At the risk of sounding old fashioned, we still believe that things
like earnings and valuations matter. We are not sticking our heads in the sand
and ignoring all the dynamic
A-26
<PAGE>
- ----------------------------------------------------------------------
Socially Responsive Fund (Cont'd)
technology driven changes in the American economy. We will participate, but not
by paying what we believe are excessive multiples for every new idea. We still
believe that we will benefit by investing in undervalued companies in a range of
industries that will use new technologies to invigorate their businesses and
technology companies with real earnings or substantial evidence pointing toward
future profitability.
As is our custom, we will briefly detail a portfolio company that we believe
has investment merit and qualifies as a solid corporate citizen. Be advised this
is an example of our investment discipline, not a recommendation. Enron is a
major natural gas distributor that also owns and operates natural gas, electric
and water utilities. The company recently announced it will be building a
state-of-the-art fiber optic telecommunications network along its 12,000-mile
gas pipeline. Enron isn't cheap on the basis of current earnings, but we have
confidence this financially strong, exceptionally well managed company can boost
earnings significantly with its entry into telecommunications.
Of course, Enron wouldn't be in our portfolio if it weren't also a socially
responsive company. Natural gas is the most environmentally friendly fuel. Enron
is also an active investor in solar energy and wind power projects. Finally, due
to its progressive work place policies, generous employee benefits, and its
policy of providing stock options to all employees, Enron has been cited by
Fortune Magazine as "one of the hundred best places to work."
In closing, we are disappointed with the Fund's performance in this very
challenging period. However, we have not lost confidence in the principle that
buying high quality, socially responsive companies at opportunistic prices will
generate attractive long-term investment returns.
Sincerely,
/s/ Janet Prindle
Janet Prindle
PORTFOLIO MANAGER
*For index definitions, refer to page A-28, titled "Glossary of Indices." The
Portfolio invests in many securities not included in the indices listed.
The composition, industries and holdings of the Portfolio are subject to
change. Socially Responsive Portfolio is invested in a wide array of stocks and
no single holding makes up more than a small fraction of the Portfolio's total
assets.
Past performance is no guarantee of future results.
The investments for the Portfolio are managed by the same portfolio manager(s)
who manage one or more other mutual funds that have similar names, investment
objectives and investment styles as the Portfolio. You should be aware that the
Portfolio is likely to differ from the other mutual funds in size, cash flow
pattern and tax matters. Accordingly, the holdings and performance of the
Portfolio can be expected to vary from those of the other mutual funds.
Neuberger Berman Management Inc.-Registered Trademark- previously absorbed
certain operating expenses of Neuberger Berman Socially Responsive Fund. Absent
such arrangement, the total returns would have been less.
A-27
<PAGE>
GLOSSARY OF INDICES
<TABLE>
<S> <C>
S&P 500 INDEX: An unmanaged index generally
considered to be representative of
stock market activity.
RUSSELL 1000-REGISTERED TRADEMARK-INDEX: Measures the performance of the 1,000
largest companies in the Russell
3000-Registered Trademark- Index
(which measures the performance of
the 3,000 largest U.S. companies
based on total market
capitalization). The Russell 1000
Index represents approximately 92% of
the total market capitalization of
the Russell 3000 Index.
RUSSELL 1000-REGISTERED TRADEMARK-VALUE Measures the performance of those
INDEX: Russell 1000 companies with lower
price-to-book ratios and lower
forecasted growth values.
RUSSELL 2000-REGISTERED TRADEMARK-INDEX: An unmanaged index consisting of
securities of the 2,000 issuers
having the smallest capitalization in
the Russell 3000-Registered
Trademark- Index, representing
approximately 8% of the Russell 3000
total market capitalization. The
smallest company's market
capitalization is roughly
$178 million.
RUSSELL 2000-REGISTERED TRADEMARK-GROWTH Measures the performance of those
INDEX: Russell 2000-Registered Trademark-
Index companies with higher
price-to-book ratios and higher
forecasted growth values.
RUSSELL 2000-REGISTERED TRADEMARK-VALUE Measures the performance of those
INDEX: Russell 2000-Registered Trademark-
Index companies with lower
price-to-book ratios and lower
forecasted growth values.
RUSSELL 1000-REGISTERED TRADEMARK-GROWTH Measures the performance of the
INDEX: Russell 1000-Registered Trademark-
companies with higher price-to-book
ratios and higher forecasted growth
values.
EAFE-REGISTERED TRADEMARK- INDEX: Also known as the Morgan Stanley
Capital International Europe,
Australasia, Far East Index. An
unmanaged index of over 1,000 foreign
stock prices. The index is translated
into U.S. dollars and includes
reinvestment of all dividends and
capital gain distributions.
THE RUSSELL MIDCAP-TRADEMARK- GROWTH An unmanaged index that measures the
INDEX: performance of those Russell Midcap
Index companies with higher
price-to-book ratios and higher
forecasted growth values.
RUSSELL MIDCAP VALUE INDEX: An unmanaged index that measures the
performance of those Russell Midcap-
Trademark- Index companies with lower
price-to-book ratios and lower
forecasted growth values.
</TABLE>
Please note that indices do not take into account any fees and expenses of the
individual securities that they track and that individuals cannot invest
directly in any index. Data about the performance of these indices are prepared
or obtained by Neuberger Berman Management Inc. and include reinvestment of all
dividends and capital gain distributions. The Portfolio may invest in many
securities not included in the above-described indices.
A-28
<PAGE>
PERFORMANCE HIGHLIGHTS
<TABLE>
<CAPTION>
FOR PERIODS
ENDED 3/31/00
SIX MONTH ---------------------------------
PERIOD AVERAGE ANNUAL TOTAL
NEUBERGER BERMAN INCEPTION ENDED RETURNS(1)
EQUITY FUNDS DATE 2/29/00(1) 1 YR 5 YR 10 YR
<S> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------
FOCUS FUND(2) 10/19/55 +21.18% +36.54% +23.50% +18.52%
GUARDIAN FUND 6/1/50 -2.67% +9.02% +14.09% +14.44%
PARTNERS FUND 1/20/75(3) -3.28% +5.92% +18.38% +15.15%
SOCIALLY RESPONSIVE FUND(4) 3/16/94 -9.68% +6.53% +18.25% +15.59% (5)
S&P 500 INDEX(6) N/A +4.11% +17.94% +26.75% +18.82%
RUSSELL 1000 VALUE INDEX(6) N/A -8.88% +6.34% +20.97% +15.99%
CENTURY FUND* 12/6/99 +23.80% +28.50% N/A N/A
RUSSELL 1000 GROWTH INDEX*(6) N/A +5.86% +13.44% N/A N/A
MANHATTAN FUND 3/1/79(3) +90.04% +94.09% +29.81% +20.48%
RUSSELL MIDCAP GROWTH INDEX(6) N/A +67.32% +77.20% +30.32% +21.69%
REGENCY FUND** 6/1/99 +12.35% +20.92% N/A N/A
RUSSELL MIDCAP VALUE INDEX**(6) N/A -11.25% -5.27% N/A N/A
GENESIS FUND(4) 9/27/88 +6.78% +26.55% +18.09% +14.18%
RUSSELL 2000 INDEX(6) N/A +35.82% +37.29% +17.24% +14.44%
MILLENNIUM FUND*** 10/20/98 +126.55% +161.94% +170.97%(5) N/A
RUSSELL 2000 GROWTH INDEX(6) N/A +66.04% +59.05% N/A N/A
INTERNATIONAL FUND(4) 6/15/94 +60.68% +69.49% +21.88% +17.70% (5)
EAFE INDEX(6) N/A +13.77% +25.40% +12.71% N/A
</TABLE>
* THESE ARE CUMULATIVE RETURNS AND ARE NOT ANNUALIZED. THE CUMULATIVE RETURNS
FOR NEUBERGER BERMAN CENTURY FUND AND THE RUSSELL 1000 GROWTH INDEX ARE FROM
DECEMBER 6, 1999, WHICH IS THE INCEPTION OF THE FUND, THROUGH FEBRUARY 29,
2000 AND MARCH 31, 2000, RESPECTIVELY. BECAUSE THIS IS A NEW FUND,
SHORT-TERM RESULTS MAY NOT BE DUPLICATED. AVERAGE NET ASSETS OF THE
PORTFOLIO FROM INCEPTION THROUGH MARCH 31, 2000 WERE APPROXIMATELY $22.8
MILLION. IT MAY BE EASIER TO ACHIEVE HIGHER RETURNS IN A SMALL FUND THAN IN
A LARGER FUND. WHILE INVESTMENT IN IPOS HAS HAD A POSITIVE IMPACT ON THE
PERFORMANCE OF THE FUND, AS THE FUND GROWS IN ASSETS, THIS IMPACT WILL
LIKELY BE DIMINISHED. NEUBERGER BERMAN MANAGEMENT INC. ("NBMI") CURRENTLY
ABSORBS CERTAIN OPERATING EXPENSES THAT EXCEED, IN THE AGGREGATE, 1.50% OF
THE AVERAGE DAILY NET ASSETS PER ANNUM OF THE FUND, UNTIL DECEMBER 31, 2002.
WITHOUT THIS ARRANGEMENT, THE FUND'S RETURNS WOULD HAVE BEEN LESS. THE
PROSPECTUS CONTAINS A FULL DISCUSSION OF THE RISKS OF INVESTING IN THE FUND.
** THESE ARE CUMULATIVE RETURNS AND ARE NOT ANNUALIZED. THE CUMULATIVE RETURNS
THROUGH MARCH 31, 2000 FOR NEUBERGER BERMAN REGENCY FUND AND THE RUSSELL
MIDCAP VALUE INDEX ARE FROM JUNE 1, 1999, WHICH IS THE INCEPTION OF THE
FUND. BECAUSE THIS IS A NEW FUND, SHORT-TERM RESULTS MAY NOT BE DUPLICATED.
AVERAGE NET ASSETS OF THE PORTFOLIO FROM INCEPTION THROUGH MARCH 31, 2000
WERE APPROXIMATELY $22.8 MILLION. IT MAY BE EASIER TO ACHIEVE HIGHER RETURNS
IN A SMALL FUND THAN IN A LARGER FUND. IN PARTICULAR, IPOS HAD A SIGNIFICANT
B-1
<PAGE>
IMPACT ON THE PERFORMANCE OF THE FUND. NBMI CURRENTLY ABSORBS CERTAIN
OPERATING EXPENSES THAT EXCEED, IN THE AGGREGATE, 1.50% OF THE AVERAGE DAILY
NET ASSETS PER ANNUM OF THE FUND, UNTIL DECEMBER 31, 2002. ABSENT THIS
ARRANGEMENT, THE FUND'S RETURNS WOULD HAVE BEEN LESS.
*** THE START UP OF MILLENNIUM FUND ROUGHLY COINCIDED WITH A PERIOD OF
ACCELERATED GROWTH IN THE SMALL-CAP GROWTH SECTOR OF THE STOCK MARKET, AND
ITS INVESTMENT IN IPOS HAD A SIGNIFICANT IMPACT ON PERFORMANCE. THERE CAN BE
NO ASSURANCE THAT THESE FACTORS WILL CONTINUE TO HAVE A POSITIVE EFFECT ON
THE FUND. IT MAY BE EASIER TO ACHIEVE HIGHER RETURNS IN A SMALL FUND THAN IN
A LARGER FUND. NBMI CURRENTLY ABSORBS CERTAIN OPERATING EXPENSES THAT
EXCEED, IN THE AGGREGATE, 1.75% OF THE AVERAGE DAILY NET ASSETS PER ANNUM OF
THE FUND ("EXPENSE LIMITATION"), SUBJECT TO 60 DAYS' PRIOR WRITTEN NOTICE.
ABSENT THIS ARRANGEMENT, THE FUND'S RETURNS WOULD HAVE BEEN LESS. MILLENNIUM
FUND HAS AGREED TO REPAY MANAGEMENT THROUGH DECEMBER 31, 2000 FOR ITS EXCESS
OPERATING EXPENSES PREVIOUSLY REIMBURSED BY NBMI, SO LONG AS ITS ANNUAL
OPERATING EXPENSES DURING THAT PERIOD DO NOT EXCEED THE EXPENSE LIMITATION.
ABSENT THIS REPAYMENT ARRANGEMENT, THE AVERAGE ANNUAL RETURNS WOULD HAVE
BEEN HIGHER. BECAUSE OF THE FUND'S AGGRESSIVE INVESTMENT APPROACH, ITS SHARE
PRICE IS SUBJECT TO GREATER VOLATILITY THAN MAY BE FOUND IN A MORE
CONSERVATIVE FUND; CONSEQUENTLY, THE FUND'S CURRENT PERFORMANCE MAY BE LESS
THAN THAT SHOWN.
1) "Total return" includes reinvestment of dividends and distributions. Results
represent past performance and do not indicate future results. The value of
an investment in the Fund and the return on the investment both will
fluctuate, and redemption proceeds may be higher or lower than an investor's
original cost.
2) Prior to November 1, 1991, the investment policies of Neuberger Berman Focus
Fund required that it invest a substantial portion of its assets in the
energy field; accordingly, performance results prior to that time do not
necessarily reflect the level of performance that may be expected under the
Fund's current investment policies.
3) These dates reflect when NBMI first became investment adviser to these
Funds.
4) NBMI previously absorbed certain operating expenses of Neuberger Berman
International Fund and Neuberger Berman Socially Responsive Fund. NBMI
previously agreed to waive a portion of the management fee borne directly by
Neuberger Berman Genesis Portfolio and indirectly by Neuberger Berman
Genesis Fund. Absent such arrangements, the average annual total returns for
the stated periods would have been less.
5) From inception.
6) The Russell 1000-Registered Trademark- Index measures the performance of the
1,000 largest companies in the Russell 3000-Registered Trademark- Index
(which measures the performance of the 3,000 largest U.S. companies based on
total market capitalization). The Russell 1000 Index represents
approximately 92% of the total market capitalization of the Russell 3000
Index. The Russell 1000 Value Index measures the performance of those
Russell 1000 companies with lower price-to-book ratios and lower forecasted
growth values. The S&P 500 Index is widely regarded as the standard for
measuring large-cap U.S. stock market performance and includes a
representative sample of leading companies in leading industries. The
Russell 1000 Growth Index measures the performance of those Russell 1000
companies with higher price-to-book ratios and higher forecasted growth
values. The Russell Midcap Growth Index measures the performance of those
Russell Midcap-Trademark- Index companies with higher price-to-book ratios
and higher forecasted growth values. The Russell Midcap Value Index measures
the performance of those Russell Midcap companies with lower price-to-book
ratios and lower forecasted growth values. The Russell Midcap Index measures
the performance of the 800 smallest companies in the Russell 1000 Index,
which represents approximately 26% of the total market capitalization of the
Russell 1000 Index (which, in turn, consists of the 1,000 largest U.S.
companies, based on market capitalization). The Russell 2000 Index is an
unmanaged index consisting of the securities of the 2,000 issuers having the
smallest capitalization in the Russell 3000 Index, representing
approximately 8% of the Russell 3000 total market capitalization. The
smallest company's market capitalization is roughly $178 million. The
Russell 2000 Growth Index measures the performance of those Russell 2000
Index companies with higher price-to-book ratios and higher forecasted
growth values. The EAFE Index, also known as the Morgan Stanley Capital
International Europe, Australasia, Far East Index, is an unmanaged index of
over 1,000 foreign stock prices and is translated into U.S. dollars. Please
note
B-2
<PAGE>
that indices do not take into account any fees and expenses of investing in
the individual securities that they track, and that individuals cannot
invest directly in any index. Data about the performance of these indices
are prepared or obtained by NBMI and include reinvestment of all dividends
and distributions. The Portfolios may invest in many securities not included
in the above-described indices.
THE RISKS INVOLVED IN SEEKING CAPITAL APPRECIATION FROM INVESTMENTS
PRIMARILY IN COMPANIES WITH SMALL OR MEDIUM MARKET CAPITALIZATION OR THAT
ARE BASED OUTSIDE THE U.S. ARE SET FORTH IN THE PROSPECTUS.
B-3
<PAGE>
STATEMENTS OF ASSETS AND LIABILITIES
Neuberger Berman
- ----------------------------------------------------------------------
Equity Funds
<TABLE>
<CAPTION>
CENTURY FOCUS GENESIS GUARDIAN
(000'S OMITTED EXCEPT PER SHARE AMOUNTS) FUND FUND FUND FUND
<S> <C> <C> <C> <C>
-----------------------------------------
ASSETS
Investment in corresponding Portfolio, at value (Note A) $28,829 $1,499,354 $676,345 $2,588,521
Receivable for Trust shares sold 214 2,965 2,057 1,038
-----------------------------------------
29,043 1,502,319 678,402 2,589,559
-----------------------------------------
LIABILITIES
Payable for Trust shares redeemed 15 1,227 2,182 7,156
Payable to administrator -- net (Note B) 2 296 138 558
Accrued expenses 13 461 446 1,248
-----------------------------------------
30 1,984 2,766 8,962
-----------------------------------------
NET ASSETS at value $29,013 $1,500,335 $675,636 $2,580,597
-----------------------------------------
NET ASSETS consist of:
Par value $ 2 $ 39 $ 44 $ 153
Paid-in capital in excess of par value 26,037 774,585 589,574 2,203,898
Accumulated undistributed net investment income (loss) (17) (915) (506) 1,848
Accumulated net realized gains (losses) on investment (15) 163,844 (30,715) 263,763
Net unrealized appreciation in value of investment 3,006 562,782 117,239 110,935
-----------------------------------------
NET ASSETS at value $29,013 $1,500,335 $675,636 $2,580,597
-----------------------------------------
SHARES OUTSTANDING
($.001 par value; unlimited shares authorized) 2,344 38,973 44,204 152,848
-----------------------------------------
NET ASSET VALUE, offering and redemption price per share $12.38 $38.50 $15.28 $16.88
-----------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-4
<PAGE>
February 29, 2000 (Unaudited)
- ----------------------------------------------------------------------
Equity Funds
<TABLE>
<CAPTION>
SOCIALLY
INTERNATIONAL MANHATTAN MILLENNIUM PARTNERS REGENCY RESPONSIVE
FUND FUND FUND FUND FUND FUND
<S> <C> <C> <C> <C> <C> <C>
----------------------------------------------------------------------
ASSETS
Investment in corresponding
Portfolio, at value (Note A) $228,635 $1,100,208 $326,493 $2,246,317 $8,535 $103,319
Receivable for Trust shares sold 11,299 2,292 2,809 940 113 196
----------------------------------------------------------------------
239,934 1,102,500 329,302 2,247,257 8,648 103,515
----------------------------------------------------------------------
LIABILITIES
Payable for Trust shares
redeemed 122 1,547 266 6,600 2 103
Payable to administrator -- net
(Note B) 45 204 57 485 6 22
Accrued expenses 88 345 77 999 19 85
----------------------------------------------------------------------
255 2,096 400 8,084 27 210
----------------------------------------------------------------------
NET ASSETS at value $239,679 $1,100,404 $328,902 $2,239,173 $8,621 $103,305
----------------------------------------------------------------------
NET ASSETS consist of:
Par value $ 9 $ 52 $ 8 $ 100 $ 1 $ 6
Paid-in capital in excess of par
value 126,237 485,930 186,380 2,034,409 8,310 89,408
Accumulated undistributed net
investment income (loss) (1,009) (2,095) (779) 9,328 2 (22)
Accumulated net realized gains
(losses) on investment 3,962 82,651 22,249 60,869 (40) 63
Net unrealized appreciation in
value of investment 110,480 533,866 121,044 134,467 348 13,850
----------------------------------------------------------------------
NET ASSETS at value $239,679 $1,100,404 $328,902 $2,239,173 $8,621 $103,305
----------------------------------------------------------------------
SHARES OUTSTANDING
($.001 par value; unlimited
shares authorized) 8,986 51,786 7,932 100,344 795 5,604
----------------------------------------------------------------------
NET ASSET VALUE, offering and
redemption price per share $26.67 $21.25 $41.46 $22.31 $10.84 $18.43
----------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-5
<PAGE>
STATEMENTS OF OPERATIONS
Neuberger Berman
- ----------------------------------------------------------------------
Equity Funds
<TABLE>
<CAPTION>
CENTURY FOCUS
FUND FUND
For the
Period from
December 6, 1999 For the
(Commencement Six Months
of Operations) to Ended
February 29, February 29,
2000 2000
(000'S OMITTED) (UNAUDITED) (UNAUDITED)
<S> <C> <C>
------------------------------
INVESTMENT INCOME
Investment income from corresponding Portfolio (Note A) $ 40 $ 5,416
------------------------------
Expenses:
Administration fee (Note B) 10 1,837
Auditing fees 2 4
Custodian fees 2 5
Legal fees 21 4
Registration and filing fees 33 23
Reimbursement of expenses previously assumed by administrator (Note B) -- --
Shareholder reports 7 71
Shareholder servicing agent fees 2 395
Trustees' fees and expenses 1 10
Miscellaneous -- 131
Expenses from corresponding Portfolio (Notes A & B) 44 3,617
------------------------------
Total expenses 122 6,097
Expenses reimbursed by administrator and/or reduced by custodian fee expense
offset arrangement (Note B) (65) (4)
------------------------------
Total net expenses 57 6,093
------------------------------
Net investment income (loss) (17) (677)
------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS FROM CORRESPONDING PORTFOLIO
(NOTE A)
Net realized gain (loss) on investment securities (15) 168,988
Net realized loss on option contracts -- (15)
Net realized loss on financial futures contracts -- --
Net realized loss on foreign currency transactions -- --
Change in net unrealized appreciation (depreciation) of investment securities,
financial futures contracts, option contracts, and translation of assets and
liabilities in foreign currencies 3,006 105,081
------------------------------
Net gain (loss) on investments from corresponding Portfolio (Note A) 2,991 274,054
------------------------------
Net increase (decrease) in net assets resulting from operations $ 2,974 $ 273,377
------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-6
<PAGE>
- ----------------------------------------------------------------------
Equity Funds
<TABLE>
<CAPTION>
GENESIS GUARDIAN INTERNATIONAL
FUND FUND FUND
For the For the For the
Six Months Six Months Six Months
Ended Ended Ended
February 29, February 29, February 29,
2000 2000 2000
(UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C>
-----------------------------------------
INVESTMENT INCOME
Investment income from corresponding Portfolio
(Note A) $ 4,451 $ 23,888 $ 567
-----------------------------------------
Expenses:
Administration fee (Note B) 961 4,059 209
Auditing fees 4 4 4
Custodian fees 5 5 5
Legal fees 4 3 4
Registration and filing fees 26 36 23
Reimbursement of expenses previously assumed
by administrator (Note B) -- -- --
Shareholder reports 69 193 21
Shareholder servicing agent fees 684 1,329 67
Trustees' fees and expenses 6 18 3
Miscellaneous 73 321 12
Expenses from corresponding Portfolio
(Notes A & B) 2,795 7,302 821
-----------------------------------------
Total expenses 4,627 13,270 1,169
Expenses reimbursed by administrator and/or
reduced by custodian fee expense offset
arrangement (Note B) -- (4) --
-----------------------------------------
Total net expenses 4,627 13,266 1,169
-----------------------------------------
Net investment income (loss) (176) 10,622 (602)
-----------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
FROM CORRESPONDING PORTFOLIO (NOTE A)
Net realized gain (loss) on investment
securities 28,243 331,762 4,331
Net realized loss on option contracts -- (63,239) --
Net realized loss on financial futures
contracts -- (4,382) (221)
Net realized loss on foreign currency
transactions -- -- (3)
Change in net unrealized appreciation
(depreciation) of investment securities,
financial futures contracts, option
contracts, and translation of assets and
liabilities in foreign currencies 14,577 (329,769) 75,569
-----------------------------------------
Net gain (loss) on investments from
corresponding Portfolio (Note A) 42,820 (65,628) 79,676
-----------------------------------------
Net increase (decrease) in net assets
resulting from operations $ 42,644 $ (55,006) $ 79,074
-----------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-7
<PAGE>
STATEMENTS OF OPERATIONS(Cont'd)
Neuberger Berman
- ----------------------------------------------------------------------
Equity Funds
<TABLE>
<CAPTION>
MANHATTAN MILLENNIUM
FUND FUND
For the For the
Six Months Six Months
Ended Ended
February 29, February 29,
2000 2000
(000'S OMITTED) (UNAUDITED) (UNAUDITED)
<S> <C> <C>
-------------------------
INVESTMENT INCOME
Investment income from corresponding Portfolio (Note A) $ 1,367 $ 359
-------------------------
Expenses:
Administration fee (Note B) 943 192
Auditing fees 5 3
Custodian fees 5 5
Legal fees 7 5
Registration and filing fees 28 39
Reimbursement of expenses previously assumed by administrator (Note B) -- 102
Shareholder reports 66 15
Shareholder servicing agent fees 325 65
Trustees' fees and expenses 6 3
Miscellaneous 52 8
Expenses from corresponding Portfolio (Notes A & B) 2,026 703
-------------------------
Total expenses 3,463 1,140
Expenses reimbursed by administrator and/or reduced by custodian fee expense
offset arrangement (Note B) (1) (2)
-------------------------
Total net expenses 3,462 1,138
-------------------------
Net investment income (loss) (2,095) (779)
-------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS FROM CORRESPONDING PORTFOLIO
(NOTE A)
Net realized gain (loss) on investment securities 85,114 23,507
Net realized loss on option contracts -- --
Net realized loss on financial futures contracts -- --
Net realized loss on foreign currency transactions -- --
Change in net unrealized appreciation (depreciation) of investment securities,
financial futures contracts, option contracts, and translation of assets and
liabilities in foreign currencies 422,648 115,136
-------------------------
Net gain (loss) on investments from corresponding Portfolio (Note A) 507,762 138,643
-------------------------
Net increase (decrease) in net assets resulting from operations $ 505,667 $ 137,864
-------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-8
<PAGE>
- ----------------------------------------------------------------------
Equity Funds
<TABLE>
<CAPTION>
SOCIALLY
PARTNERS REGENCY RESPONSIVE
FUND FUND FUND
For the For the For the
Six Months Six Months Six Months
Ended Ended Ended
February 29, February 29, February 29,
2000 2000 2000
(UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C>
-----------------------------------------
INVESTMENT INCOME
Investment income from corresponding Portfolio
(Note A) $ 20,396 $ 63 $ 639
-----------------------------------------
Expenses:
Administration fee (Note B) 3,412 10 148
Auditing fees 4 2 4
Custodian fees 5 5 5
Legal fees 5 7 6
Registration and filing fees 24 10 25
Reimbursement of expenses previously assumed
by administrator (Note B) -- -- --
Shareholder reports 153 18 21
Shareholder servicing agent fees 1,104 6 63
Trustees' fees and expenses 16 1 3
Miscellaneous 258 2 11
Expenses from corresponding Portfolio
(Notes A & B) 6,224 35 378
-----------------------------------------
Total expenses 11,205 96 664
Expenses reimbursed by administrator and/or
reduced by custodian fee expense offset
arrangement (Note B) (8) (39) --
-----------------------------------------
Total net expenses 11,197 57 664
-----------------------------------------
Net investment income (loss) 9,199 6 (25)
-----------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
FROM CORRESPONDING PORTFOLIO (NOTE A)
Net realized gain (loss) on investment
securities 73,574 (3) 122
Net realized loss on option contracts -- -- --
Net realized loss on financial futures
contracts -- -- --
Net realized loss on foreign currency
transactions -- -- --
Change in net unrealized appreciation
(depreciation) of investment securities,
financial futures contracts, option
contracts, and translation of assets and
liabilities in foreign currencies (156,914) 849 (11,334)
-----------------------------------------
Net gain (loss) on investments from
corresponding Portfolio (Note A) (83,340) 846 (11,212)
-----------------------------------------
Net increase (decrease) in net assets
resulting from operations $ (74,141) $ 852 $ (11,237)
-----------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-9
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
Neuberger Berman
- ----------------------------------------------------------------------
Equity Funds
<TABLE>
<CAPTION>
CENTURY FUND FOCUS FUND
Period from
December 6, 1999
(Commencement Six Months
of Operations) to Ended Year
February 29, February 29, Ended
2000 2000 AUGUST 31,
(000'S OMITTED) (UNAUDITED) (UNAUDITED) 1999
<S> <C> <C> <C>
-------------------------------------------
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss) $ (17) $ (677) $ 414
Net realized gain (loss) on investments from corresponding Portfolio (Note A) (15) 168,973 187,154
Change in net unrealized appreciation (depreciation) of investments from
corresponding Portfolio (Note A) 3,006 105,081 227,003
-------------------------------------------
Net increase (decrease) in net assets resulting from operations 2,974 273,377 414,571
-------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income -- (356) (3,445)
Net realized gain on investments -- (188,772) (75,412)
-------------------------------------------
Total distributions to shareholders -- (189,128) (78,857)
-------------------------------------------
FROM TRUST SHARE TRANSACTIONS:
Proceeds from shares sold 27,204 102,527 129,052
Proceeds from reinvestment of dividends and distributions -- 165,993 69,014
Payments for shares redeemed (1,165) (179,042) (327,093)
-------------------------------------------
Net increase (decrease) from Trust share transactions 26,039 89,478 (129,027)
-------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS 29,013 173,727 206,687
NET ASSETS:
Beginning of period -- 1,326,608 1,119,921
-------------------------------------------
End of period $ 29,013 $ 1,500,335 $ 1,326,608
-------------------------------------------
Accumulated undistributed net investment income (loss) at end of period $ (17) $ (915) $ 118
-------------------------------------------
NUMBER OF TRUST SHARES:
Sold 2,443 2,699 3,650
Issued on reinvestment of dividends and distributions -- 4,398 1,951
Redeemed (99) (4,722) (9,296)
-------------------------------------------
Net increase (decrease) in shares outstanding 2,344 2,375 (3,695)
-------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-10
<PAGE>
- ----------------------------------------------------------------------
Equity Funds
<TABLE>
<CAPTION>
GENESIS FUND GUARDIAN FUND INTERNATIONAL FUND
Six Months Six Months Six Months
Ended Year Ended Year Ended Year
February 29, Ended February 29, Ended February 29, Ended
2000 August 31, 2000 August 31, 2000 August 31,
(UNAUDITED) 1999 (UNAUDITED) 1999 (UNAUDITED) 1999
<S> <C> <C> <C> <C> <C> <C>
-----------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss) $ (176) $ 6,133 $ 10,622 $ 28,879 $ (602) $ (504)
Net realized gain (loss) on
investments from corresponding
Portfolio (Note A) 28,243 (58,582) 264,141 761,289 4,107 11,645
Change in net unrealized
appreciation (depreciation) of
investments from corresponding
Portfolio (Note A) 14,577 235,324 (329,769) 244,338 75,569 12,310
-----------------------------------------------------------------------------
Net increase (decrease) in net
assets resulting from operations 42,644 182,875 (55,006) 1,034,506 79,074 23,451
-----------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (4,065) (9,718) (15,488) (27,356) (79) --
Net realized gain on investments -- (27,534) (747,250) (663,907) (1,664) (86)
-----------------------------------------------------------------------------
Total distributions to shareholders (4,065) (37,252) (762,738) (691,263) (1,743) (86)
-----------------------------------------------------------------------------
FROM TRUST SHARE TRANSACTIONS:
Proceeds from shares sold 94,807 237,870 138,519 317,386 242,165 170,346
Proceeds from reinvestment of
dividends and distributions 3,650 33,074 706,675 637,856 1,616 79
Payments for shares redeemed (312,655) (644,388) (887,886) (2,068,212) (193,949) (206,780)
-----------------------------------------------------------------------------
Net increase (decrease) from Trust
share transactions (214,198) (373,444) (42,692) (1,112,970) 49,832 (36,355)
-----------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS (175,619) (227,821) (860,436) (769,727) 127,163 (12,990)
NET ASSETS:
Beginning of period 851,255 1,079,076 3,441,033 4,210,760 112,516 125,506
-----------------------------------------------------------------------------
End of period $ 675,636 $ 851,255 $ 2,580,597 $ 3,441,033 $ 239,679 $ 112,516
-----------------------------------------------------------------------------
Accumulated undistributed net
investment income (loss) at end of
period $ (506) $ 3,735 $ 1,848 $ 6,714 $ (1,009) $ (328)
-----------------------------------------------------------------------------
NUMBER OF TRUST SHARES:
Sold 6,610 17,134 6,674 13,413 11,246 11,513
Issued on reinvestment of dividends
and distributions 257 2,369 39,124 28,622 71 5
Redeemed (21,815) (46,885) (44,384) (88,128) (9,043) (13,865)
-----------------------------------------------------------------------------
Net increase (decrease) in shares
outstanding (14,948) (27,382) 1,414 (46,093) 2,274 (2,347)
-----------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-11
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS(Cont'd)
Neuberger Berman
- ----------------------------------------------------------------------
Equity Funds
<TABLE>
<CAPTION>
MILLENNIUM FUND
MANHATTAN FUND Period from
Six Months Six Months October 20, 1998
Ended Year Ended (Commencement
February 29, Ended February 29, of Operations) to
2000 August 31, 2000 August 31,
(000'S OMITTED) (UNAUDITED) 1999 (UNAUDITED) 1999
<S> <C> <C> <C> <C>
--------------------------------------------------------
INCREASE (DECREASE) IN NET
ASSETS:
FROM OPERATIONS:
Net investment income
(loss) $ (2,095) $ (2,832) $ (779) $ (328)
Net realized gain
(loss) on investments
from corresponding
Portfolio (Note A) 85,114 53,255 23,507 7,970
Change in net
unrealized
appreciation
(depreciation) of
investments from
corresponding
Portfolio (Note A) 422,648 122,884 115,136 5,908
--------------------------------------------------------
Net increase (decrease)
in net assets
resulting from
operations 505,667 173,307 137,864 13,550
--------------------------------------------------------
DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment income -- -- -- --
Net realized gain on
investments (55,413) (40,870) (8,900) --
--------------------------------------------------------
Total distributions to
shareholders (55,413) (40,870) (8,900) --
--------------------------------------------------------
FROM TRUST SHARE
TRANSACTIONS:
Proceeds from shares
sold 157,095 71,250 192,947 64,149
Proceeds from
reinvestment of
dividends and
distributions 51,240 37,860 8,610 --
Payments for shares
redeemed (124,145) (152,235) (68,065) (11,253)
--------------------------------------------------------
Net increase (decrease)
from Trust share
transactions 84,190 (43,125) 133,492 52,896
--------------------------------------------------------
NET INCREASE (DECREASE) IN
NET ASSETS 534,444 89,312 262,456 66,446
NET ASSETS:
Beginning of period 565,960 476,648 66,446 --
--------------------------------------------------------
End of period $ 1,100,404 $ 565,960 $ 328,902 $ 66,446
--------------------------------------------------------
Accumulated
undistributed net
investment income
(loss) at end of
period $ (2,095) $ -- $ (779) $ --
--------------------------------------------------------
NUMBER OF TRUST SHARES:
Sold 9,336 6,259 6,496 4,097
Issued on reinvestment
of dividends and
distributions 3,391 3,301 302 --
Redeemed (7,835) (13,292) (2,275) (688)
--------------------------------------------------------
Net increase (decrease)
in shares outstanding 4,892 (3,732) 4,523 3,409
--------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-12
<PAGE>
- ----------------------------------------------------------------------
Equity Funds
<TABLE>
<CAPTION>
REGENCY FUND SOCIALLY
PARTNERS FUND Period from RESPONSIVE FUND
Six Months Six Months June 1, 1999 Six Months
Ended Year Ended (Commencement Ended Year
February 29, Ended February 29, of Operations) to February 29, Ended
2000 August 31, 2000 August 31, 2000 August 31,
(UNAUDITED) 1999 (UNAUDITED) 1999 (UNAUDITED) 1999
<S> <C> <C> <C> <C> <C> <C>
----------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss) $ 9,199 $ 29,186 $ 6 $ 10 $ (25) $ 134
Net realized gain (loss) on
investments from corresponding
Portfolio (Note A) 73,574 304,202 (3) 72 122 4,788
Change in net unrealized
appreciation (depreciation) of
investments from corresponding
Portfolio (Note A) (156,914) 381,420 849 (501) (11,334) 25,901
----------------------------------------------------------------------------------
Net increase (decrease) in net
assets resulting from operations (74,141) 714,808 852 (419) (11,237) 30,823
----------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (29,057) -- (14) -- (113) (355)
Net realized gain on investments (310,615) (282,180) (109) -- (4,899) (4,467)
----------------------------------------------------------------------------------
Total distributions to shareholders (339,672) (282,180) (123) -- (5,012) (4,822)
----------------------------------------------------------------------------------
FROM TRUST SHARE TRANSACTIONS:
Proceeds from shares sold 78,959 350,742 3,217 8,590 18,907 38,284
Proceeds from reinvestment of
dividends and distributions 325,366 268,026 99 -- 4,824 4,361
Payments for shares redeemed (605,697) (1,009,715) (3,367) (228) (23,077) (32,244)
----------------------------------------------------------------------------------
Net increase (decrease) from Trust
share transactions (201,372) (390,947) (51) 8,362 654 10,401
----------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS (615,185) 41,681 678 7,943 (15,595) 36,402
NET ASSETS:
Beginning of period 2,854,358 2,812,677 7,943 -- 118,900 82,498
----------------------------------------------------------------------------------
End of period $ 2,239,173 $ 2,854,358 $ 8,621 $ 7,943 $ 103,305 $ 118,900
----------------------------------------------------------------------------------
Accumulated undistributed net
investment income (loss) at end of
period $ 9,328 $ 29,186 $ 2 $ 10 $ (22) $ 116
----------------------------------------------------------------------------------
NUMBER OF TRUST SHARES:
Sold 3,183 13,336 312 831 943 1,926
Issued on reinvestment of dividends
and distributions 13,952 10,691 10 -- 245 224
Redeemed (24,834) (38,449) (336) (22) (1,159) (1,630)
----------------------------------------------------------------------------------
Net increase (decrease) in shares
outstanding (7,699) (14,422) (14) 809 29 520
----------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-13
<PAGE>
NOTES TO FINANCIAL STATEMENTS
Neuberger Berman February 29, 2000 (Unaudited)
- ----------------------------------------------------------------------
Equity Funds
NOTE A -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
1) GENERAL: Neuberger Berman Century Fund ("Century"), Neuberger Berman Focus
Fund ("Focus"), Neuberger Berman Genesis Fund ("Genesis"), Neuberger Berman
Guardian Fund ("Guardian"), Neuberger Berman International Fund
("International"), Neuberger Berman Manhattan Fund ("Manhattan"), Neuberger
Berman Millennium Fund ("Millennium"), Neuberger Berman Partners Fund
("Partners"), Neuberger Berman Regency Fund ("Regency"), and Neuberger Berman
Socially Responsive Fund ("Socially Responsive") (collectively, the "Funds")
are separate operating series of Neuberger Berman Equity Funds (the "Trust"),
a Delaware business trust organized pursuant to a Trust Instrument dated
December 23, 1992. The Trust is registered as a diversified, open-end
management investment company under the Investment Company Act of 1940, as
amended (the "1940 Act"), and its shares are registered under the Securities
Act of 1933, as amended (the "1933 Act"). Century, Millennium, and Regency
had no operations until December 6, 1999, October 20, 1998, and June 1, 1999,
respectively, other than matters relating to their organization and
registration as diversified, open-end management investment companies under
the 1940 Act, and registration of their shares under the 1933 Act. The
trustees of the Trust may establish additional series or classes of shares
without the approval of shareholders.
The assets of each Fund belong only to that Fund, and the liabilities of
each Fund are borne solely by that Fund and no other.
Each Fund seeks to achieve its investment objective by investing all of
its net investable assets in its corresponding portfolio of Equity Managers
Trust (Global Managers Trust with respect to International) (each a
"Portfolio") having the same investment objective and policies as the Fund.
The value of each Fund's investment in its corresponding Portfolio reflects
that Fund's proportionate interest in the net assets of that Portfolio
(93.10%, 86.70%, 43.98%, 70.51%, 98.02%, 89.70%, 95.28%, 76.24%, 24.31%, and
80.80%, for Century, Focus, Genesis, Guardian, International, Manhattan,
Millennium, Partners, Regency, and Socially Responsive, respectively, at
February 29, 2000). On November 16, 1999, 63.72% of Neuberger Berman Socially
Responsive Portfolio was held by another regulated investment company, which
redeemed its interest in the Portfolio through a redemption in kind on that
date. Neuberger Berman Management Inc. ("Management") carried out this
transaction in a way that minimized the effect on the Portfolio. The
performance of each Fund is directly affected by the performance
B-14
<PAGE>
of its corresponding Portfolio. The financial statements of each Portfolio,
including the Schedule of Investments, are included elsewhere in this report
and should be read in conjunction with the corresponding Fund's financial
statements.
2) PORTFOLIO VALUATION: Each Fund records its investment in its corresponding
Portfolio at value. Investment securities held by each Portfolio are valued
as indicated in the notes following the Portfolios' Schedule of Investments.
3) TAXES: The Funds are treated as separate entities for U.S. Federal income tax
purposes. It is the policy of Focus, Genesis, Guardian, International,
Manhattan, Millennium, Partners, Regency, and Socially Responsive to continue
to and the intention of Century to qualify as regulated investment companies
by complying with the provisions available to certain investment companies,
as defined in applicable sections of the Internal Revenue Code, and to make
distributions of investment company taxable income and net capital gains
(after reduction for any amounts available for U.S. Federal income tax
purposes as capital loss carryforwards) sufficient to relieve it from all, or
substantially all, U.S. Federal income taxes. Accordingly, each Fund paid no
U.S. Federal income taxes and no provision for U.S. Federal income taxes was
required.
4) DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS: Each Fund earns income, net of
Portfolio expenses, daily on its investment in its corresponding Portfolio.
Income dividends and distributions from net realized capital gains, if any,
are normally distributed in December. Guardian generally distributes
substantially all of its net investment income, if any, at the end of each
calendar quarter. Income dividends and capital gain distributions to
shareholders are recorded on the ex-dividend date. To the extent each Fund's
net realized capital gains, if any, can be offset by capital loss
carryforwards ($3,865,978 expiring in 2007 for Genesis, determined as of
August 31, 1999), it is the policy of each Fund not to distribute such gains.
Each Fund distinguishes between dividends on a tax basis and a financial
reporting basis and only distributions in excess of tax basis earnings and
profits are reported in the financial statements as a return of capital.
Differences in the recognition or classification of income between the
financial statements and tax earnings and profits which result in temporary
over-distributions for financial statement purposes are classified as
distributions in excess of net investment income or accumulated net realized
gains.
5) EXPENSE ALLOCATION: Each Fund bears all costs of its operations. Expenses
incurred by the Trust with respect to any two or more Funds are allocated in
proportion to the net assets of such Funds, except where a more appropriate
allocation of expenses to each Fund can otherwise be made fairly. Expenses
directly attributable to a Fund are charged to that Fund.
B-15
<PAGE>
6) OTHER: All net investment income and realized and unrealized capital gains
and losses of each Portfolio are allocated pro rata among its respective
Funds and any other investors in the Portfolio.
NOTE B -- ADMINISTRATION FEES, DISTRIBUTION ARRANGEMENTS, AND OTHER TRANSACTIONS
WITH AFFILIATES:
Each Fund retains Management as its administrator under an Administration
Agreement ("Agreement"). Pursuant to this Agreement each Fund pays Management an
administration fee at the annual rate of 0.26% of that Fund's average daily net
assets. Each Fund indirectly pays for investment management services through its
investment in its corresponding Portfolio (see Note B of Notes to Financial
Statements of the Portfolios).
Management has voluntarily undertaken to reimburse Century, International,
Millennium, and Regency for their operating expenses plus their pro rata portion
of their corresponding Portfolio's operating expenses (including the fees
payable to Management, but excluding interest, taxes, brokerage commissions, and
extraordinary expenses) ("Operating Expenses") which exceed, in the aggregate,
1.50%, 1.70%, 1.75%, and 1.50%, respectively, per annum of their average daily
net assets (each an "Expense Limitation"). The undertakings for International
and Millennium are subject to termination by Management upon at least 60 days'
prior written notice to the Fund. Millennium has agreed to repay Management
through December 31, 2000, for its excess Operating Expenses previously
reimbursed by Management through December 31, 1999, so long as Millennium's
annual Operating Expenses during that period do not exceed its Expense
Limitation. For the six months ended February 29, 2000, Millennium reimbursed
Management $102,478 under this agreement. At February 29, 2000, Millennium has
no remaining contingent liability to Management under the agreement. For the six
months ended February 29, 2000, there was no reimbursement to International by
Management. For Century and Regency, Management has contractually undertaken to
reimburse any excess Operating Expenses through December 31, 2002. For the
period ended February 29, 2000, such excess expenses amounted to $64,965 and
$37,739 for Century and Regency, respectively. Century and Regency each have
agreed to repay Management through December 31, 2005, for their excess Operating
Expenses previously reimbursed by Management, so long as their annual Operating
Expenses during that period do not exceed their Expense Limitations, and the
repayments are made within three years after the year in which Management issued
the reimbursement. During the period ended February 29, 2000, neither Century
nor Regency reimbursed Management.
Management and Neuberger Berman, LLC ("Neuberger"), a member firm of The New
York Stock Exchange and sub-adviser to each Portfolio, are wholly owned
subsidiaries of Neuberger Berman Inc., a publicly held company. Several
individuals who are officers and/or trustees of the Trust are also employees of
Neuberger and/or Management.
B-16
<PAGE>
Each Fund also has a distribution agreement with Management. Management
receives no compensation therefor and no commissions for sales or redemptions of
shares of beneficial interest of each Fund.
Each Portfolio has an expense offset arrangement in connection with its
custodian contract. The impact of this arrangement, reflected in the Statements
of Operations under the caption Expenses from corresponding Portfolio, was a
reduction of $417, $3,775, $69, $3,783, $489, $810, $2,200, $8,104, $729, and
$302, for Century, Focus, Genesis, Guardian, International, Manhattan,
Millennium, Partners, Regency, and Socially Responsive, respectively.
NOTE C -- INVESTMENT TRANSACTIONS:
During the six months ended February 29, 2000, additions and reductions in
each Fund's investment in its corresponding Portfolio were as follows:
<TABLE>
<CAPTION>
ADDITIONS REDUCTIONS
- -----------------------------------------------------------------------------
<S> <C> <C>
CENTURY $ 25,939,000 $ 96,000
FOCUS 25,947,000 130,265,000
GENESIS 4,724,000 220,952,000
GUARDIAN 310,000 809,661,000
INTERNATIONAL 124,106,000 87,106,000
MANHATTAN 82,411,000 55,144,000
MILLENNIUM 139,008,000 16,854,000
PARTNERS -- 541,605,000
REGENCY 2,327,000 2,591,000
SOCIALLY RESPONSIVE 9,367,000 13,712,000
</TABLE>
At February 29, 2000, Neuberger Berman International Portfolio's cost of
investments for U.S. Federal income tax purposes was $132,767,000. Gross
unrealized appreciation of investments was $116,605,000 and gross unrealized
depreciation of investments was $4,545,000, resulting in net unrealized
appreciation of $112,060,000, based on cost for U.S. Federal income tax
purposes.
NOTE D -- UNAUDITED FINANCIAL INFORMATION:
The financial information included in this interim report is taken from the
records of each Fund without audit by independent accountants/auditors. Annual
reports contain audited financial statements.
B-17
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger Berman
- --------------------------------------------------------------------------------
Century Fund(1)
The following table includes selected data for a share outstanding throughout
the period and other performance information derived from the Financial
Statements. It should be read in conjunction with its corresponding Portfolio's
Financial Statements and notes thereto.
<TABLE>
<CAPTION>
Period from
December 6, 1999(2)
to February 29,
2000
(UNAUDITED)
<S> <C>
-------------------
Net Asset Value, Beginning of Period $10.00
-------------------
Income From Investment Operations
Net Investment Loss (.01)
Net Gains or Losses on Securities
(both realized and unrealized) 2.39
-------------------
Total From Investment Operations 2.38
-------------------
Net Asset Value, End of Period $12.38
-------------------
Total Return(3)(4) +23.80%
-------------------
Ratios/Supplemental Data
Net Assets, End of Period (in
millions) $ 29.0
-------------------
Ratio of Gross Expenses to Average
Net Assets(5)(6) 1.51%
-------------------
Ratio of Net Expenses to Average Net
Assets(6)(7) 1.50%
-------------------
Ratio of Net Investment Loss to
Average Net Assets(6) (.45%)
-------------------
</TABLE>
SEE NOTES TO FINANCIAL HIGHLIGHTS
B-18
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger Berman
- --------------------------------------------------------------------------------
Focus Fund(1)(8)
The following table includes selected data for a share outstanding throughout
each period and other performance information derived from the Financial
Statements. It should be read in conjunction with its corresponding Portfolio's
Financial Statements and notes thereto.
<TABLE>
<CAPTION>
Six Months
Ended
February 29,
2000 Year Ended August 31,
(UNAUDITED) 1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C> <C>
----------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 36.25 $ 27.79 $ 38.89 $ 28.46 $ 28.88 $24.42
----------------------------------------------------------------------
Income From Investment Operations
Net Investment Income (Loss) (.02) .02 .10 .08 .19 .17
Net Gains or Losses on Securities
(both realized and unrealized) 7.59 10.50 (6.21) 12.00 .85 5.97
----------------------------------------------------------------------
Total From Investment Operations 7.57 10.52 (6.11) 12.08 1.04 6.14
----------------------------------------------------------------------
Less Distributions
Dividends (from net investment
income) (.01) (.09) (.06) (.22) (.11) (.20)
Distributions (from net capital
gains) (5.31) (1.97) (4.93) (1.43) (1.35) (1.48)
----------------------------------------------------------------------
Total Distributions (5.32) (2.06) (4.99) (1.65) (1.46) (1.68)
----------------------------------------------------------------------
Net Asset Value, End of Period $ 38.50 $ 36.25 $ 27.79 $ 38.89 $ 28.46 $28.88
----------------------------------------------------------------------
Total Return(3) +21.18%(4) +38.09% -17.37% +43.92% +3.70% +27.47%
----------------------------------------------------------------------
Ratios/Supplemental Data
Net Assets, End of Period (in
millions) $1,500.3 $1,326.6 $1,119.9 $1,411.9 $1,071.4 $956.0
----------------------------------------------------------------------
Ratio of Gross Expenses to Average
Net Assets(5) .86%(6) .85% .84% .86% .89% --
----------------------------------------------------------------------
Ratio of Net Expenses to Average Net
Assets .86%(6) .85% .84% .86% .89% .87%
----------------------------------------------------------------------
Ratio of Net Investment Income
(Loss) to Average Net Assets (.10%)(6) .03% .27% .21% .69% .75%
----------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL HIGHLIGHTS
B-19
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger Berman
- --------------------------------------------------------------------------------
Genesis Fund(1)
The following table includes selected data for a share outstanding throughout
each period and other performance information derived from the Financial
Statements. It should be read in conjunction with its corresponding Portfolio's
Financial Statements and notes thereto.
<TABLE>
<CAPTION>
Six Months
Ended
February 29,
2000 Year Ended August 31,
(UNAUDITED) 1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C> <C>
----------------------------------------------------------------
Net Asset Value, Beginning of Period $14.39 $12.47 $ 15.55 $10.91 $ 9.52 $ 8.27
----------------------------------------------------------------
Income From Investment Operations
Net Investment Income (Loss) .01 .11 .11 (.01) (.01) --
Net Gains or Losses on Securities
(both realized and unrealized) .96 2.27 (3.00) 4.80 1.95 1.56
----------------------------------------------------------------
Total From Investment Operations .97 2.38 (2.89) 4.79 1.94 1.56
----------------------------------------------------------------
Less Distributions
Dividends (from net investment
income) (.08) (.12) -- -- -- --
Distributions (from net capital
gains) -- (.34) (.19) (.15) (.55) (.31)
----------------------------------------------------------------
Total Distributions (.08) (.46) (.19) (.15) (.55) (.31)
----------------------------------------------------------------
Net Asset Value, End of Period $15.28 $14.39 $ 12.47 $15.55 $10.91 $ 9.52
----------------------------------------------------------------
Total Return(3) +6.78%(4) +19.20% -18.82% +44.32% +21.32% +19.69%
----------------------------------------------------------------
Ratios/Supplemental Data
Net Assets, End of Period (in
millions) $675.6 $851.3 $1,079.1 $718.1 $195.4 $111.5
----------------------------------------------------------------
Ratio of Gross Expenses to Average
Net Assets(5) 1.25%(6) 1.17% 1.11% 1.17% 1.28% --
----------------------------------------------------------------
Ratio of Net Expenses to Average Net
Assets 1.25%(6) 1.17% 1.10%(7) 1.16%(7) 1.28%(7) 1.35%(7)
----------------------------------------------------------------
Ratio of Net Investment Income
(Loss) to Average Net Assets (.04%)(6) .61% .72% (.08%) (.18%) (.16%)
----------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL HIGHLIGHTS
B-20
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger Berman
- --------------------------------------------------------------------------------
Guardian Fund(1)
The following table includes selected data for a share outstanding throughout
each period and other performance information derived from the Financial
Statements. It should be read in conjunction with its corresponding Portfolio's
Financial Statements and notes thereto.
<TABLE>
<CAPTION>
Six Months
Ended
February 29,
2000 Year Ended August 31,
(UNAUDITED) 1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C> <C>
------------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 22.72 $ 21.32 $ 31.41 $ 23.78 $ 23.61 $ 19.52
------------------------------------------------------------------------
Income From Investment Operations
Net Investment Income .08 .18 .18 .15 .31 .27
Net Gains or Losses on Securities
(both realized and unrealized) (.33) 5.29 (6.09) 8.96 .90 4.30
------------------------------------------------------------------------
Total From Investment Operations (.25) 5.47 (5.91) 9.11 1.21 4.57
------------------------------------------------------------------------
Less Distributions
Dividends (from net investment
income) (.11) (.16) (.18) (.24) (.28) (.25)
Distributions (from net capital
gains) (5.48) (3.91) (4.00) (1.24) (.76) (.23)
------------------------------------------------------------------------
Total Distributions (5.59) (4.07) (4.18) (1.48) (1.04) (.48)
------------------------------------------------------------------------
Net Asset Value, End of Period $ 16.88 $ 22.72 $ 21.32 $ 31.41 $ 23.78 $ 23.61
------------------------------------------------------------------------
Total Return(3) -2.67%(4) +26.12% -20.80% +39.69% +5.27% +24.06%
------------------------------------------------------------------------
Ratios/Supplemental Data
Net Assets, End of Period (in
millions) $2,580.6 $3,441.0 $4,210.8 $6,475.1 $4,905.2 $3,947.5
------------------------------------------------------------------------
Ratio of Gross Expenses to Average
Net Assets(5) .85%(6) .82% .79% .80% .82% --
------------------------------------------------------------------------
Ratio of Net Expenses to Average Net
Assets .85%(6) .82% .79% .80% .82% .80%
------------------------------------------------------------------------
Ratio of Net Investment Income to
Average Net Assets .68%(6) .70% .59% .55% 1.37% 1.40%
------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL HIGHLIGHTS
B-21
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger Berman
- --------------------------------------------------------------------------------
International Fund(1)
The following table includes selected data for a share outstanding throughout
each period and other performance information derived from the Financial
Statements. It should be read in conjunction with its corresponding Portfolio's
Financial Statements and notes thereto.
<TABLE>
<CAPTION>
Six Months
Ended
February 29,
2000 Year Ended August 31,
(UNAUDITED) 1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C> <C>
--------------------------------------------------------------
Net Asset Value, Beginning of Period $16.76 $13.85 $14.83 $11.91 $10.70 $10.46
--------------------------------------------------------------
Income From Investment Operations
Net Investment Income (Loss) (.05) (.08) (.03) -- .01 .06
Net Gains or Losses on Securities
(both realized and unrealized) 10.18 3.00 (.81) 2.94 1.24 .21
--------------------------------------------------------------
Total From Investment Operations 10.13 2.92 (.84) 2.94 1.25 .27
--------------------------------------------------------------
Less Distributions
Dividends (from net investment
income) (.01) -- -- (.02) (.04) (.03)
Distributions (from net capital
gains) (.21) (.01) (.14) -- -- --
--------------------------------------------------------------
Total Distributions (.22) (.01) (.14) (.02) (.04) (.03)
--------------------------------------------------------------
Net Asset Value, End of Period $26.67 $16.76 $13.85 $14.83 $11.91 $10.70
--------------------------------------------------------------
Total Return(3) +60.68%(4) +21.09% -5.69% +24.71% +11.73% +2.60%
--------------------------------------------------------------
Ratios/Supplemental Data
Net Assets, End of Period (in
millions) $239.7 $112.5 $125.5 $115.4 $ 57.0 $ 26.4
--------------------------------------------------------------
Ratio of Gross Expenses to Average
Net Assets(5) 1.46%(6) 1.61% 1.71% 1.70% 1.70% --
--------------------------------------------------------------
Ratio of Net Expenses to Average Net
Assets 1.46%(6) 1.61%(7) 1.70%(7) 1.70%(7) 1.70%(7) 1.70%(7)
--------------------------------------------------------------
Ratio of Net Investment Income
(Loss) to Average Net Assets (.75%)(6) (.43%) (.24%) (.02%) .24% .73%
--------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL HIGHLIGHTS
B-22
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger Berman
- --------------------------------------------------------------------------------
Manhattan Fund(1)
The following table includes selected data for a share outstanding throughout
each period and other performance information derived from the Financial
Statements. It should be read in conjunction with its corresponding Portfolio's
Financial Statements and notes thereto.
<TABLE>
<CAPTION>
Six Months
Ended
February 29,
2000 Year Ended August 31,
(UNAUDITED) 1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C> <C>
--------------------------------------------------------------
Net Asset Value, Beginning of Period $ 12.07 $ 9.42 $14.51 $11.94 $13.27 $11.28
--------------------------------------------------------------
Income From Investment Operations
Net Investment Income (Loss) (.04) (.06) (.05) (.03) (.04) --
Net Gains or Losses on Securities
(both realized and unrealized) 10.42 3.54 (1.20) 4.26 (.33) 2.70
--------------------------------------------------------------
Total From Investment Operations 10.38 3.48 (1.25) 4.23 (.37) 2.70
--------------------------------------------------------------
Less Distributions
Dividends (from net investment
income) -- -- -- -- -- (.01)
Distributions (from net capital
gains) (1.20) (.83) (3.84) (1.66) (.96) (.70)
--------------------------------------------------------------
Total Distributions (1.20) (.83) (3.84) (1.66) (.96) (.71)
--------------------------------------------------------------
Net Asset Value, End of Period $ 21.25 $12.07 $ 9.42 $14.51 $11.94 $13.27
--------------------------------------------------------------
Total Return(3) +90.04%(4) +37.40% -11.02% +38.75% -2.91% +26.00%
--------------------------------------------------------------
Ratios/Supplemental Data
Net Assets, End of Period (in
millions) $1,100.4 $566.0 $476.6 $570.4 $516.2 $612.0
--------------------------------------------------------------
Ratio of Gross Expenses to Average
Net Assets(5) .95%(6) 1.00% .95% .99% .98% --
--------------------------------------------------------------
Ratio of Net Expenses to Average Net
Assets .95%(6) 1.00% .94% .98% .98% .98%
--------------------------------------------------------------
Ratio of Net Investment Income
(Loss) to Average Net Assets (.58%)(6) (.50%) (.42%) (.20%) (.27%) .03%
--------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL HIGHLIGHTS
B-23
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger Berman
- --------------------------------------------------------------------------------
Millennium Fund(1)
The following table includes selected data for a share outstanding throughout
each period and other performance information derived from the Financial
Statements. It should be read in conjunction with its corresponding Portfolio's
Financial Statements and notes thereto.
<TABLE>
<CAPTION>
Six Months
Ended Period from
February 29, October 20, 1998(2)
2000 to August 31,
(UNAUDITED) 1999
<S> <C> <C>
-----------------------------------
Net Asset Value, Beginning of Period $19.49 $10.00
-----------------------------------
Income From Investment Operations
Net Investment Loss (.10) (.10)
Net Gains or Losses on Securities
(both realized and unrealized) 23.91 9.59
-----------------------------------
Total From Investment Operations 23.81 9.49
-----------------------------------
Less Distributions
Distributions (from net capital
gains) (1.84) --
-----------------------------------
Net Asset Value, End of Period $41.46 $19.49
-----------------------------------
Total Return(3)(4) +126.55% +94.90%
-----------------------------------
Ratios/Supplemental Data
Net Assets, End of Period (in
millions) $328.9 $ 66.4
-----------------------------------
Ratio of Gross Expenses to Average
Net Assets(5) 1.47%(9) 1.76%(6)
-----------------------------------
Ratio of Net Expenses to Average Net
Assets(7) 1.47%(9) 1.75%(6)
-----------------------------------
Ratio of Net Investment Loss to
Average Net Assets(6) (1.05%) (1.23%)
-----------------------------------
</TABLE>
SEE NOTES TO FINANCIAL HIGHLIGHTS
B-24
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger Berman
- --------------------------------------------------------------------------------
Partners Fund(1)
The following table includes selected data for a share outstanding throughout
each period and other performance information derived from the Financial
Statements. It should be read in conjunction with its corresponding Portfolio's
Financial Statements and notes thereto.
<TABLE>
<CAPTION>
Six Months
Ended
February 29,
2000 Year Ended August 31,
(UNAUDITED) 1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C> <C>
------------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 26.42 $ 22.97 $ 31.60 $ 23.88 $ 23.72 $ 21.32
------------------------------------------------------------------------
Income From Investment Operations
Net Investment Income .11 .27 .23 .19 .22 .17
Net Gains or Losses on Securities
(both realized and unrealized) (.83) 5.59 (2.83) 10.36 2.84 3.94
------------------------------------------------------------------------
Total From Investment Operations (.72) 5.86 (2.60) 10.55 3.06 4.11
------------------------------------------------------------------------
Less Distributions
Dividends (from net investment
income) (.29) -- (.19) (.22) (.20) (.11)
Distributions (from net capital
gains) (3.10) (2.41) (5.84) (2.61) (2.70) (1.60)
------------------------------------------------------------------------
Total Distributions (3.39) (2.41) (6.03) (2.83) (2.90) (1.71)
------------------------------------------------------------------------
Net Asset Value, End of Period $ 22.31 $ 26.42 $ 22.97 $ 31.60 $ 23.88 $ 23.72
------------------------------------------------------------------------
Total Return(3) -3.28%(4) +26.08% -10.03% +47.11% +13.86% +21.53%
------------------------------------------------------------------------
Ratios/Supplemental Data
Net Assets, End of Period (in
millions) $2,239.2 $2,854.4 $2,812.7 $3,103.7 $1,871.9 $1,564.0
------------------------------------------------------------------------
Ratio of Gross Expenses to Average
Net Assets(5) .85%(6) .82% .80% .81% .84% --
------------------------------------------------------------------------
Ratio of Net Expenses to Average Net
Assets .85%(6) .82% .80% .81% .84% .83%
------------------------------------------------------------------------
Ratio of Net Investment Income to
Average Net Assets .70%(6) .94% .78% .72% .93% .83%
------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL HIGHLIGHTS
B-25
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger Berman
- --------------------------------------------------------------------------------
Regency Fund(1)
The following table includes selected data for a share outstanding throughout
each period and other performance information derived from the Financial
Statements. It should be read in conjunction with its corresponding Portfolio's
Financial Statements and notes thereto.
<TABLE>
<CAPTION>
Six Months
Ended Period from
February 29, June 1, 1999(2)
2000 to August 31,
(UNAUDITED) 1999
<S> <C> <C>
-------------------------------
Net Asset Value, Beginning of Period $ 9.82 $10.00
-------------------------------
Income From Investment Operations
Net Investment Income .01 .01
Net Gains or Losses on Securities
(both realized and unrealized) 1.19 (.19)
-------------------------------
Total From Investment Operations 1.20 (.18)
-------------------------------
Less Distributions
Dividends (from net investment
income) (.02) --
Distributions (from net capital
gains) (.16) --
-------------------------------
Total Distributions (.18) --
-------------------------------
Net Asset Value, End of Period $10.84 $ 9.82
-------------------------------
Total Return(3)(4) +12.35% -1.80%
-------------------------------
Ratios/Supplemental Data
Net Assets, End of Period (in
millions) $ 8.6 $ 7.9
-------------------------------
Ratio of Gross Expenses to Average
Net Assets(5)(6) 1.52% 1.51%
-------------------------------
Ratio of Net Expenses to Average Net
Assets(6)(7) 1.50% 1.50%
-------------------------------
Ratio of Net Investment Income to
Average Net Assets(6) .15% .66%
-------------------------------
</TABLE>
SEE NOTES TO FINANCIAL HIGHLIGHTS
B-26
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger Berman
- --------------------------------------------------------------------------------
Socially Responsive Fund(1)
The following table includes selected data for a share outstanding throughout
each period and other performance information derived from the Financial
Statements. It should be read in conjunction with its corresponding Portfolio's
Financial Statements and notes thereto.
<TABLE>
<CAPTION>
Six Months
Ended
February 29,
2000 Year Ended August 31,
(UNAUDITED) 1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C> <C>
--------------------------------------------------------------
Net Asset Value, Beginning of Period $21.33 $16.32 $17.79 $13.88 $11.84 $10.07
--------------------------------------------------------------
Income From Investment Operations
Net Investment Income (Loss) -- .02 .07 .03 .02 .03
Net Gains or Losses on Securities
(both realized and unrealized) (2.01) 5.94 (1.11) 4.33 2.35 1.76
--------------------------------------------------------------
Total From Investment Operations (2.01) 5.96 (1.04) 4.36 2.37 1.79
--------------------------------------------------------------
Less Distributions
Dividends (from net investment
income) (.02) (.07) (.03) (.03) (.02) (.02)
Distributions (from net capital
gains) (.87) (.88) (.40) (.42) (.31) --
--------------------------------------------------------------
Total Distributions (.89) (.95) (.43) (.45) (.33) (.02)
--------------------------------------------------------------
Net Asset Value, End of Period $18.43 $21.33 $16.32 $17.79 $13.88 $11.84
--------------------------------------------------------------
Total Return(3) -9.68%(4) +37.09% -6.02% +31.96% +20.19% +17.82%
--------------------------------------------------------------
Ratios/Supplemental Data
Net Assets, End of Period (in
millions) $103.3 $118.9 $ 82.5 $ 59.7 $ 32.9 $ 8.2
--------------------------------------------------------------
Ratio of Gross Expenses to Average
Net Assets(5) 1.17%(6) 1.10% 1.10% 1.49% 1.50% --
--------------------------------------------------------------
Ratio of Net Expenses to Average Net
Assets 1.17%(6) 1.10% 1.10% 1.48%(7) 1.50%(7) 1.51%(7)
--------------------------------------------------------------
Ratio of Net Investment Income
(Loss) to Average Net Assets (.04%)(6) .12% .43% .23% .19% .36%
--------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL HIGHLIGHTS
B-27
<PAGE>
NOTES TO FINANCIAL HIGHLIGHTS
Neuberger Berman February 29, 2000 (Unaudited)
- ----------------------------------------------------------------------
Equity Funds
1) The per share amounts and ratios which are shown reflect income and expenses,
including each Fund's proportionate share of its corresponding Portfolio's
income and expenses.
2) The date investment operations commenced.
3) Total return based on per share net asset value reflects the effects of
changes in net asset value on the performance of each Fund during each fiscal
period and assumes dividends and other distributions, if any, were
reinvested. Results represent past performance and do not guarantee future
results. Investment returns and principal may fluctuate and shares when
redeemed may be worth more or less than original cost. For Century,
International, Millennium, Regency, and Socially Responsive, total return
would have been lower if Management had not reimbursed certain expenses. For
Genesis, total return would have been lower if the investment manager had not
waived a portion of the management fee.
4) Not annualized.
5) For fiscal periods ending after September 1, 1995, the Fund is required to
calculate an expense ratio without taking into consideration any expense
reductions related to expense offset arrangements.
6) Annualized.
7) After reimbursement of expenses by Management as described in Note B of Notes
to Financial Statements. Had Management not undertaken such action the
annualized ratio of net expenses to average daily net assets would have been:
<TABLE>
<CAPTION>
Period from
December 6, 1999 to
February 29,
CENTURY 2000
- --------------------------------------------------------------------
<S> <C>
Net Expenses 3.19%
-------------------
</TABLE>
Had the investment manager not waived a portion of the management fee
borne directly by Neuberger Berman Genesis Portfolio the annualized ratios of
net expenses to average daily net assets would have been:
<TABLE>
<CAPTION>
Year Ended August 31,
1998 1997 1996 1995
- ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Expenses 1.12% 1.26% 1.38% 1.38%
--------------------------------
</TABLE>
B-28
<PAGE>
After reimbursement of expenses by Management as described in Note B of
Notes to Financial Statements. Had Management not undertaken such action the
annualized ratios of net expenses to average daily net assets would have
been:
<TABLE>
<CAPTION>
Year Ended
August 31,
INTERNATIONAL 1996 1995
- ---------------------------------------------------------------
<S> <C> <C>
Net Expenses 2.28% 2.31%
--------------
</TABLE>
<TABLE>
<CAPTION>
Period from
October 20, 1998 to
August 31,
MILLENNIUM 1999
- --------------------------------------------------------------------
<S> <C>
Net Expenses 2.13%
</TABLE>
<TABLE>
<CAPTION>
Six Months Period from
Ended June 1, 1999 to
February 29, August 31,
REGENCY 2000 1999
- --------------------------------------------------------------------------------
<S> <C> <C>
Net Expenses 2.49% 8.38%
-------------------------------
</TABLE>
After reimbursement of expenses by Management. Had Management not
undertaken such action the annualized ratios of net expenses to average daily
net assets would have been:
<TABLE>
<CAPTION>
Year Ended
August 31,
SOCIALLY RESPONSIVE 1996 1995
- ---------------------------------------------------------------
<S> <C> <C>
Net Expenses 1.69% 2.50%
--------------
</TABLE>
Had International not reimbursed Management, the annualized ratios of net
expenses to average daily net assets would have been:
<TABLE>
<CAPTION>
Year Ended August 31,
1999 1998 1997
- ------------------------------------------------------------------------
<S> <C> <C> <C>
Net Expenses 1.59% 1.61% 1.69%
-----------------------
</TABLE>
Had Millennium not reimbursed Management, as described in Note B of Notes
to Financial Statements, the annualized ratio of net expenses to average
daily net assets would have been:
<TABLE>
<CAPTION>
Six Months
Ended
February 29,
2000
- -------------------------------------------------------------
<S> <C>
Net Expenses 1.40%
------------
</TABLE>
B-29
<PAGE>
Had Socially Responsive not reimbursed Management, the annualized ratio of
net expenses to average daily net assets would have been:
<TABLE>
<CAPTION>
Year Ended
August 31,
1997
- -----------------------------------------------------------
<S> <C>
Net Expenses 1.20%
----------
</TABLE>
8) Prior to January 1, 1995, its name was Neuberger&Berman Selected Sectors
Fund.
9) Annualized; includes unannualized component reflecting the Fund's
reimbursement to Management.
B-30
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger Berman February 29, 2000 (Unaudited)
- --------------------------------------------------------------------------------
Century Portfolio
<TABLE>
<CAPTION>
TOP TEN EQUITY HOLDINGS
----------------------------------------------------
HOLDING PERCENTAGE
<C> <S> <C>
1. General Electric 3.0%
2. Microsoft Corp. 2.9%
3. Cisco Systems 2.9%
4. Oracle Corp. 2.8%
5. Amgen, Inc. 2.4%
6. Nortel Networks 2.1%
7. Nokia Corp. ADR 2.1%
8. Sun Microsystems 2.1%
9. Qwest Communications International 2.0%
10. Wal-Mart Stores 1.9%
</TABLE>
<TABLE>
<CAPTION>
Market
Number Value(1)
of Shares (000's omitted)
- --------------------- ---------------
<C> <S> <C>
COMMON STOCKS (94.2%)
CAPITAL GOODS (4.2%)
7,100 General Electric $ 938
7,700 Honeywell International 371
-------
1,309
-------
COMMUNICATIONS (16.7%)
9,500 Cabletron Systems 466
6,800 Cisco Systems 899
2,500 Comverse Technology 492
1,600 JDS Uniphase 422
3,000 Motorola, Inc. 511
2,100 Nextel Communications 287
3,300 Nokia Corp. ADR 654
4,312 NTL Inc. 395
3,100 QUALCOMM Inc. 442
13,200 Qwest Communications
International 612
-------
5,180
-------
CONSUMER CYCLICALS (3.8%)
7,400 AMFM Inc. 454
3,700 EchoStar Communications 422
4,400 Harley-Davidson 300
-------
1,176
-------
<CAPTION>
Market
Number Value(1)
of Shares (000's omitted)
- --------------------- ---------------
<C> <S> <C>
CONSUMER STAPLES (6.9%)
8,900 AT&T Corp.-Liberty Media Group
Class A $ 465
11,700 Comcast Corp. Class A Special 497
8,800 Kimberly-Clark 455
1,200 SONY CORP. ADR 376
4,100 Time Warner 351
-------
2,144
-------
ELECTRICAL EQUIPMENT (8.9%)
3,700 Agilent Technologies 384
3,300 Analog Devices 518
2,700 Applied Materials 494
1,600 Broadcom Corp. 316
4,800 Conexant Systems 471
3,400 Texas Instruments 566
-------
2,749
-------
ENERGY (3.2%)
7,500 Enron Corp. 517
6,400 Schlumberger Ltd. 473
-------
990
-------
FINANCIAL SERVICES (4.2%)
6,200 Capital One Financial 228
9,700 Citigroup Inc. 501
5,500 Merrill Lynch 564
-------
1,293
-------
FOOD & TOBACCO (1.6%)
7,700 Anheuser-Busch 494
-------
HARDWARE (7.7%)
4,800 EMC Corp. 571
6,300 Flextronics International 383
2,800 Hewlett-Packard 377
3,400 Sanmina Corp. 398
6,800 Sun Microsystems 648
-------
2,377
-------
HEALTH CARE (7.2%)
10,800 Amgen, Inc. 737
3,300 Biogen, Inc. 356
2,500 Genentech, Inc. 482
</TABLE>
C-1
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger Berman February 29, 2000 (Unaudited)
- --------------------------------------------------------------------------------
Century Portfolio (Cont'd)
<TABLE>
<CAPTION>
Market
Number Value(1)
of Shares (000's omitted)
- --------------------- ---------------
<C> <S> <C>
1,100 MedImmune, Inc. $ 218
5,100 Warner-Lambert 437
-------
2,230
-------
INTERNET (8.7%)
7,500 America Online 443
3,700 DoubleClick Inc. 329
4,100 eSPEED, Inc. 254
300 FreeMarkets, Inc. 52
11,300 Intuit Inc. 593
2,900 Safeguard Scientifics 507
3,150 Yahoo! Inc. 503
-------
2,681
-------
RETAIL (4.8%)
7,800 Home Depot 451
6,800 Tiffany & Co. 436
12,200 Wal-Mart Stores 594
-------
1,481
-------
SOFTWARE (10.1%)
4,600 Citrix Systems 485
10,200 Microsoft Corp. 911
11,500 Oracle Corp. 854
10,600 Peregrine Systems 579
4,300 Rational Software 306
-------
3,135
-------
TELECOMMUNICATIONS (6.2%)
9,900 MCI WorldCom 442
4,300 Metromedia Fiber Network 309
9,000 Nextel Partners 288
5,900 Nortel Networks 658
1,750 VoiceStream Wireless 233
-------
1,930
-------
TOTAL COMMON STOCKS (COST
$25,788) 29,169
-------
</TABLE>
<TABLE>
<CAPTION>
Market
Principal Value(1)
Amount (000's omitted)
- --------------------- ---------------
<C> <S> <C>
U.S. GOVERNMENT AGENCY SECURITIES (5.2%)
$1,600,000 Federal Home Loan Bank,
Discount Notes, 5.72%,
due 3/1/00
(COST $1,600) $ 1,600(2)
-------
REPURCHASE AGREEMENTS (3.6%)
1,101,000 State Street Bank and Trust
Co. Repurchase Agreement,
5.71%, due 3/1/00, dated
2/29/00, Maturity Value
$1,101,175, Collateralized by
$1,130,000 Fannie Mae, Notes,
6.40%, due 9/27/01
(Collateral Value $1,135,718)
(COST $1,101) 1,101(2)
-------
SHORT-TERM INVESTMENTS (8.0%)
2,493,268 N&B Securities Lending Quality
Fund, LLC (COST
$2,493) 2,493(2)
-------
TOTAL INVESTMENTS (111.0%)
(COST $30,982) 34,363(3)
Liabilities, less cash,
receivables and other assets
[(11.0%)] (3,396)
-------
TOTAL NET ASSETS (100.0%) $30,967
-------
</TABLE>
SEE NOTES TO SCHEDULE OF INVESTMENTS
C-2
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger Berman February 29, 2000 (Unaudited)
- --------------------------------------------------------------------------------
Focus Portfolio
<TABLE>
<CAPTION>
TOP TEN EQUITY HOLDINGS
----------------------------------------------------
HOLDING PERCENTAGE
<C> <S> <C>
1. Citigroup Inc. 9.5%
2. Morgan Stanley Dean Witter 6.9%
3. Sterling Commerce 6.8%
4. Rational Software 6.4%
5. Chase Manhattan 6.2%
6. Capital One Financial 5.9%
7. Countrywide Credit Industries 5.0%
8. Providian Financial 4.9%
9. Compuware Corp. 4.8%
10. Wellpoint Health Networks 3.9%
</TABLE>
<TABLE>
<CAPTION>
Market
Number Value(1)
of Shares (000's omitted)
- --------------------- ---------------
<C> <S> <C>
COMMON STOCKS (99.0%)
AUTOMOTIVE (3.8%)
855,000 General Motors $ 65,034
----------
FINANCIAL SERVICES (46.5%)
2,767,500 Capital One Financial 101,879
1,355,000 Chase Manhattan 107,892
3,183,375 Citigroup Inc. 164,541
3,490,800 Countrywide Credit Industries 87,052
1,948,600 FleetBoston Financial 53,099
640,000 Hartford Financial Services
Group 20,000
1,706,000 Morgan Stanley Dean Witter 120,167
950,000 Nationwide Financial Services 21,909
1,310,000 Providian Financial 84,904
1,377,400 Travelers Property Casualty 43,560
----------
805,003
----------
<CAPTION>
Market
Number Value(1)
of Shares (000's omitted)
- --------------------- ---------------
<C> <S> <C>
HEALTH CARE (5.1%)
2,398,800 Foundation Health Systems $ 19,940
1,008,500 Wellpoint Health Networks 68,074
----------
88,014
----------
RETAIL (6.4%)
2,593,000 Furniture Brands International 41,650(4)
2,219,500 Jones Apparel Group 50,216
90,000 Neiman Marcus Group Class B 1,890
633,000 Staples, Inc. 17,091
----------
110,847
----------
TECHNOLOGY (37.2%)
375,000 American Management Systems 11,930
150,000 ANTEC Corp. 7,941
1,028,000 Atmel Corp. 50,886
675,000 Compaq Computer 16,791
3,715,000 Compuware Corp. 82,194
1,662,000 Gartner Group Class A 23,787
420,000 International Rectifier 17,588
485,000 Lattice Semiconductor 34,071
837,500 Microchip Technology 52,291
718,000 Oracle Corp. 53,312
505,000 Photronics, Inc. 21,494
1,560,000 Rational Software 110,955
2,675,000 Sterling Commerce 117,198
346,700 Sterling Software 12,438
170,000 Synopsys, Inc. 6,789
1,050,000 Tech Data 22,772
----------
642,437
----------
TOTAL COMMON STOCKS (COST
$1,081,905) 1,711,335
----------
</TABLE>
C-3
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger Berman February 29, 2000 (Unaudited)
- --------------------------------------------------------------------------------
Focus Portfolio (Cont'd)
<TABLE>
<CAPTION>
Market
Principal Value(1)
Amount (000's omitted)
- --------------------- ---------------
<C> <S> <C>
REPURCHASE AGREEMENTS (0.8%)
$13,747,000 State Street Bank and Trust
Co. Repurchase Agreement,
5.71%, due 3/1/00, dated
2/29/00, Maturity Value
$13,749,180, Collateralized
by $14,090,000 Fannie Mae,
Notes, 6.40%, due 9/27/01
(Collateral Value
$14,161,295) (COST $13,747) $ 13,747(2)
----------
</TABLE>
<TABLE>
<CAPTION>
Market
Principal Value(1)
Amount (000's omitted)
- --------------------- ---------------
<C> <S> <C>
SHORT-TERM INVESTMENTS (0.4%)
$ 6,891,378 N&B Securities Lending Quality
Fund, LLC (COST $6,891) $ 6,891(2)
----------
TOTAL INVESTMENTS (100.2%)
(COST $1,102,543) 1,731,973(3)
Liabilities, less cash,
receivables and other assets
[(0.2%)] (2,682)
----------
TOTAL NET ASSETS (100.0%) $1,729,291
----------
</TABLE>
SEE NOTES TO SCHEDULE OF INVESTMENTS
C-4
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger Berman February 29, 2000 (Unaudited)
- --------------------------------------------------------------------------------
Genesis Portfolio
<TABLE>
<CAPTION>
TOP TEN EQUITY HOLDINGS
----------------------------------------------------
HOLDING PERCENTAGE
<C> <S> <C>
1. Dallas Semiconductor 3.1%
2. Zebra Technologies 2.7%
3. AptarGroup Inc. 2.6%
4. National-Oilwell 2.2%
5. AAR Corp. 2.1%
6. Fair, Isaac & Co. 2.0%
7. Newport News Shipbuilding 2.0%
8. Methode Electronics Class A 1.9%
9. Alliant Techsystems 1.9%
10. Black Box 1.9%
</TABLE>
<TABLE>
<CAPTION>
Market
Number Value(1)
of Shares (000's omitted)
- --------------------- ---------------
<C> <S> <C>
COMMON STOCKS (94.6%)
AEROSPACE (4.1%)
1,364,950 AAR Corp. $ 32,418(4)
787,200 Aviall Inc. 6,445
504,400 Cordant Technologies 16,330
248,750 Ducommun Inc. 2,317
329,700 Moog, Inc. Class A 5,893
----------
63,403
----------
AUTOMOTIVE (0.9%)
628,500 Donaldson Co. 14,298
----------
BANKING & FINANCIAL (5.6%)
135,200 Bank United 3,541
498,100 Community First Bankshares 6,973
667,600 Cullen/Frost Bankers 14,353
331,400 Highland Bancorp 5,468(4)
169,950 Hudson United Bancorp 3,431
303,000 OceanFirst Financial 4,829
1,118,300 Peoples Heritage Financial
Group 11,882
<CAPTION>
Market
Number Value(1)
of Shares (000's omitted)
- --------------------- ---------------
<C> <S> <C>
769,675 Sterling Bancshares $ 7,312
300,350 Texas Regional Bancshares 7,340
1,017,300 Webster Financial 21,491
----------
86,620
----------
BUILDING, CONSTRUCTION & FURNISHING (1.1%)
254,800 Lincoln Electric Holdings 4,968
273,600 Simpson Manufacturing 11,594
----------
16,562
----------
BUSINESS SERVICES (0.3%)
789,400 SOS Staffing Services 3,947(4)
----------
CONSUMER CYCLICALS (0.3%)
176,300 Valassis Communications 4,881
----------
CONSUMER PRODUCTS & SERVICES (4.8%)
811,000 Alberto-Culver Class A 16,017
381,638 Block Drug 12,546
1,066,000 Church & Dwight 18,189
390,300 Matthews International 9,440
1,036,800 Ruddick Corp. 13,932
462,000 The First Years 3,754
----------
73,878
----------
DEFENSE (4.9%)
545,200 Alliant Techsystems 29,509(4)
1,102,100 Newport News Shipbuilding 31,203
723,700 Primex Technologies 15,198(4)
----------
75,910
----------
DIAGNOSTIC EQUIPMENT (0.4%)
463,500 ADAC Laboratories 5,765
----------
</TABLE>
C-5
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger Berman
- --------------------------------------------------------------------------------
Genesis Portfolio (Cont'd)
<TABLE>
<CAPTION>
Market
Number Value(1)
of Shares (000's omitted)
- --------------------- ---------------
<C> <S> <C>
ELECTRONICS (4.6%)
467,600 Benchmark Electronics $ 14,788
1,187,400 Dallas Semiconductor 47,941
180,000 SCI Systems 7,245
----------
69,974
----------
ENERGY (1.9%)
677,300 Cabot Oil & Gas 10,710
150,000 Cross Timbers Oil 1,293
808,290 Swift Energy 9,548
894,500 Unit Corp. 7,771
----------
29,322
----------
FINANCIAL TECHNOLOGY (2.8%)
640,100 Fair, Isaac & Co. 31,245
293,100 Investment Technology Group 11,358
----------
42,603
----------
HEALTH CARE (9.5%)
413,000 Acuson Corp. 5,524
132,500 Datascope Corp. 5,284
669,300 DENTSPLY International 17,151
1,126,500 Haemonetics Corp. 26,825
925,600 Mentor Corp. 25,685
421,950 Patterson Dental 15,203
473,700 STAAR Surgical 5,684
835,000 Trigon Healthcare 26,668
458,600 Universal Health Services
Class B 17,828
----------
145,852
----------
INDUSTRIAL & COMMERCIAL PRODUCTS (6.7%)
557,800 Brady Corp. 15,130
325,300 Dionex Corp. 10,267
543,900 Hussmann International 7,853
643,500 IDEX Corp. 15,927
1,065,200 Kaydon Corp. 24,500
268,900 Roper Industries 7,327
<CAPTION>
Market
Number Value(1)
of Shares (000's omitted)
- --------------------- ---------------
<C> <S> <C>
1,826,400 Wallace Computer Services $ 19,063
203,750 Woodhead Industries 3,311
----------
103,378
----------
INSURANCE (4.6%)
753,200 Annuity and Life Re 17,041
96,500 Brown & Brown 3,185
657,800 FBL Financial Group 10,607
1,446,700 Mutual Risk Management 19,892
891,500 Scottish Annuity & Life
Holdings 7,076(4)
848,700 W. R. Berkley 13,632
----------
71,433
----------
LODGING (0.3%)
499,500 Prime Hospitality 4,246
----------
MACHINERY & EQUIPMENT (0.8%)
643,620 Gardner Denver Machinery 12,229
----------
OFFICE EQUIPMENT (1.8%)
1,019,500 United Stationers 27,399
----------
OIL SERVICES (11.1%)
318,700 Cal Dive International 11,473
681,600 Friede Goldman Halter 3,578
983,800 Global Industries 10,084
992,100 IRI International 4,837
556,500 Nabors Industries 19,964
1,369,412 National-Oilwell 33,208
798,400 Oceaneering International 15,170
781,600 Offshore Logistics 7,767
767,300 Pride International 11,366
460,400 Smith International 28,861
631,000 Tuboscope Inc. 10,530
451,200 UTI Energy 14,467
----------
171,305
----------
PACKING & CONTAINERS (2.6%)
1,646,600 AptarGroup Inc. 39,415
----------
</TABLE>
C-6
<PAGE>
February 29, 2000 (Unaudited)
- --------------------------------------------------------------------------------
Genesis Portfolio (Cont'd)
<TABLE>
<CAPTION>
Market
Number Value(1)
of Shares (000's omitted)
- --------------------- ---------------
<C> <S> <C>
PUBLISHING & BROADCASTING (1.3%)
302,300 Houghton Mifflin $ 12,035
272,900 Meredith Corp. 7,812
----------
19,847
----------
RESTAURANTS (1.1%)
785,050 Brinker International 17,075
----------
RETAILING (3.8%)
679,624 99 Cents Only Stores 17,033
353,300 Ann Taylor Stores 6,735
660,000 Claire's Stores 11,509
125,000 Payless ShoeSource 4,937
451,800 ShopKo Stores 7,511
282,800 Whole Foods Market 10,738
----------
58,463
----------
TECHNOLOGY (15.9%)
798,700 Analysts International 10,583
391,800 Black Box 29,312
488,600 CACI International 13,895
892,700 CIBER, Inc. 20,755
474,200 Davox Corp. 18,138
295,100 Jack Henry & Associates 20,620
173,500 Keane, Inc. 4,164
106,200 Kronos Inc. 6,744
350,000 Mastech Corp. 11,594
141,000 META Group 4,371
513,900 Methode Electronics Class A 29,870
71,000 SBS Technologies 3,865
410,100 Transaction Systems Architects 18,506
185,300 Wind River Systems 10,759
623,300 Zebra Technologies 41,488
----------
244,664
----------
<CAPTION>
Market
Number Value(1)
of Shares (000's omitted)
- --------------------- ---------------
<C> <S> <C>
TRANSPORTATION (0.5%)
228,400 Circle International Group $ 5,581
213,600 Maritrans Inc. 1,402
----------
6,983
----------
UTILITIES, ELECTRIC & GAS (2.9%)
93,600 Atmos Energy 1,603
125,700 CH Energy Group 3,590
648,600 Montana Power 25,539
78,000 National Fuel Gas 3,193
252,900 NUI Corp. 6,006
140,100 Otter Tail Power 5,184
----------
45,115
----------
TOTAL COMMON STOCKS (COST
$1,269,841) 1,454,567
----------
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount
- ---------------------
<C> <S> <C>
REPURCHASE AGREEMENTS (2.2%)
$34,309,000 State Street Bank and Trust
Co. Repurchase Agreement,
5.71%, due 3/1/00, dated
2/29/00, Maturity Value
$34,314,442, Collateralized
by $35,165,000 Fannie Mae,
Notes, 6.40%, due 9/27/01
(Collateral Value
$35,342,935)
(COST $34,309) 34,309(2)
----------
</TABLE>
C-7
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger Berman February 29, 2000 (Unaudited)
- --------------------------------------------------------------------------------
Genesis Portfolio (Cont'd)
<TABLE>
SHORT-TERM INVESTMENTS (6.0%)
$20,000,000 Merrill Lynch & Co., Inc.,
5.73%, due 3/3/00 $ 19,994
<CAPTION>
Market
Principal Value(1)
Amount (000's omitted)
- --------------------- ---------------
<C> <S> <C>
25,000,000 Wal-Mart Stores Inc., 5.75%,
due 3/7/00 24,976
47,518,102 N&B Securities Lending Quality
Fund, LLC 47,518
----------
TOTAL SHORT-TERM INVESTMENTS
(COST $92,488) 92,488(2)
----------
TOTAL INVESTMENTS (102.8%)
(COST $1,396,638) 1,581,364(3)
Liabilities, less cash,
receivables and other assets
[(2.8%)] (43,559)
----------
TOTAL NET ASSETS (100.0%) $1,537,805
----------
</TABLE>
SEE NOTES TO SCHEDULE OF INVESTMENTS
C-8
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger Berman February 29, 2000 (Unaudited)
- --------------------------------------------------------------------------------
Guardian Portfolio
<TABLE>
<CAPTION>
TOP TEN EQUITY HOLDINGS
----------------------------------------------------
HOLDING PERCENTAGE
<C> <S> <C>
1. Wellpoint Health Networks 4.1%
2. News Corp. ADR 3.9%
3. American Home Products 2.9%
4. Chase Manhattan 2.8%
5. Bell Atlantic 2.7%
6. Exxon Mobil 2.7%
7. Wells Fargo 2.3%
8. MCI WorldCom 2.3%
9. Seagate Technology 2.3%
10. Cendant Corp. 2.2%
</TABLE>
<TABLE>
<CAPTION>
Market
Number Value(1)
of Shares (000's omitted)
- --------------------- ---------------
<C> <S> <C>
COMMON STOCKS (94.7%)
BANKING & FINANCIAL (5.1%)
1,301,500 Chase Manhattan $ 103,632
2,571,400 Wells Fargo 85,017
----------
188,649
----------
BASIC MATERIALS (7.5%)
2,996,000 Cabot Corp. 66,286
795,500 Champion International 41,167
256,000 Dow Chemical 27,776
1,165,400 duPont 58,853
1,363,200 International Paper 50,183
2,269,500 Millennium Chemicals 31,773
----------
276,038
----------
CAPITAL GOODS (5.9%)
260,000 Deere & Co. 9,295
435,300 Emerson Electric 19,833
595,600 General Dynamics 25,760
409,100 Illinois Tool Works 21,145
4,005,800 Republic Services 43,563
1,738,200 SCI Systems 69,963
145,400 Solectron Corp. 9,524
356,100 United Technologies 18,139
----------
217,222
----------
<CAPTION>
Market
Number Value(1)
of Shares (000's omitted)
- --------------------- ---------------
<C> <S> <C>
COMMUNICATION SERVICES (8.4%)
1,618,100 AT&T Corp. $ 79,995
2,006,700 Bell Atlantic 98,203
1,903,500 MCI WorldCom 84,944
1,146,000 SBC Communications 43,548
----------
306,690
----------
CONSUMER CYCLICALS (9.5%)
914,300 Carnival Corp. 26,343
4,636,300 Cendant Corp. 82,584
1,643,100 Federated Department Stores 60,281
462,300 General Motors 35,164
2,077,600 Lear Corp. 43,889
1,533,300 Lowe's Cos. 73,024
716,300 Safeway Inc. 27,622
----------
348,907
----------
CONSUMER GOODS & SERVICES (0.8%)
938,200 PepsiCo, Inc. 30,257
----------
CONSUMER STAPLES (6.1%)
891,100 AMFM Inc. 54,691
406,200 Coca-Cola Enterprises 9,495
1,168,900 Kimberly-Clark 60,418
1,084,200 McDonald's Corp. 34,220
1,122,300 Nabisco Holdings 32,827
1,620,000 Philip Morris 32,501
----------
224,152
----------
DIVERSIFIED (0.3%)
252,000 Tyco International 9,560
----------
DRUGS (0.3%)
310,300 Schering-Plough 10,822
----------
ENERGY (13.3%)
1,150,600 Amerada Hess 58,177
873,300 Chevron Corp. 65,225
866,600 Diamond Offshore Drilling 27,514
1,292,246 Exxon Mobil 97,322
1,618,900 Halliburton Co. 61,822
718,000 Royal Dutch Petroleum - NY
Shares 37,695
</TABLE>
C-9
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger Berman
- --------------------------------------------------------------------------------
Guardian Portfolio (Cont'd)
<TABLE>
<CAPTION>
Market
Number Value(1)
of Shares (000's omitted)
- --------------------- ---------------
<C> <S> <C>
533,500 Schlumberger Ltd. $ 39,412
500,000 Texaco Inc. 23,719
1,099,113 Transocean Sedco Forex 43,346
3,822,500 Union Pacific Resources Group 34,164
----------
488,396
----------
FINANCIAL SERVICES (9.9%)
379,500 Aon Corp. 7,946
3,265,800 Associates First Capital 64,908
1,501,000 Capital One Financial 55,255
1,544,300 Citigroup Inc. 79,821
1,089,807 FleetBoston Financial 29,697
955,500 Hartford Financial Services
Group 29,859
525,200 Morgan Stanley Dean Witter 36,994
260,500 Progressive Corp. 15,500
1,325,000 SLM Holding 41,489
----------
361,469
----------
HEALTH CARE (9.3%)
2,449,100 American Home Products 106,536
417,600 Bristol-Myers Squibb 23,725
220,400 Eli Lilly 13,100
555,500 Warner-Lambert 47,530(5)
2,226,996 Wellpoint Health Networks 150,322(5)
----------
341,213
----------
<CAPTION>
Market
Number Value(1)
of Shares (000's omitted)
- --------------------- ---------------
<C> <S> <C>
MEDIA & ENTERTAINMENT (0.3%)
331,100 Walt Disney $ 11,092
----------
PACKING & CONTAINERS (0.4%)
316,300 Coastal Corp. 13,305
----------
TECHNOLOGY (14.9%)
625,500 Apple Computer 71,698
460,600 BMC Software 21,188
364,500 Compaq Computer 9,067
821,600 Computer Associates 52,839
983,000 Gateway Inc. 67,581
544,900 Hewlett-Packard 73,289
424,100 IBM 43,258
446,100 Micron Technology 43,746
601,600 Novell, Inc. 19,890
862,800 Rational Software 61,367
1,677,800 Seagate Technology 83,680
5,000 VIA NET.WORKS 330
----------
547,933
----------
TRANSPORTATION (2.7%)
681,600 AMR Corp. 36,039
1,617,000 Burlington Northern Santa Fe 31,835
993,200 Continental Airlines Class B 31,410
----------
99,284
----------
TOTAL COMMON STOCKS (COST
$3,409,757) 3,474,989
----------
PREFERRED STOCKS (3.9%)
2,874,200 News Corp. ADR (COST $79,659) 144,608
----------
</TABLE>
C-10
<PAGE>
February 29, 2000 (Unaudited)
- --------------------------------------------------------------------------------
Guardian Portfolio (Cont'd)
<TABLE>
<CAPTION>
Market
Principal Value(1)
Amount (000's omitted)
- --------------------- ---------------
<C> <S> <C>
REPURCHASE AGREEMENTS (1.6%)
$50,000,000 State Street Bank and Trust
Co. Repurchase Agreement,
5.71%, due 3/1/00, dated
2/29/00, Maturity Value
$50,007,931, Collateralized
by $51,245,000 Fannie Mae,
Notes, 6.40%, due 9/27/01
(Collateral Value
$51,504,300) $ 50,000
8,708,000 State Street Bank and Trust
Co. Repurchase Agreement,
5.71%, due 3/1/00, dated
2/29/00, Maturity Value
$8,709,381, Collateralized by
$8,925,000 Fannie Mae, Notes,
6.40%, due 9/27/01
(Collateral Value $8,970,161) 8,708
----------
TOTAL REPURCHASE AGREEMENTS
(COST $58,708) 58,708(2)
----------
<CAPTION>
Market
Principal Value(1)
Amount (000's omitted)
- --------------------- ---------------
<C> <S> <C>
SHORT-TERM INVESTMENTS (2.3%)
$25,000,000 Pfizer Inc., 5.82%,
due 3/2/00 $ 24,996
58,319,639 N&B Securities Lending Quality
Fund, LLC 58,320
----------
TOTAL SHORT-TERM INVESTMENTS
(COST $83,316) 83,316(2)
----------
TOTAL INVESTMENTS (102.5%)
(COST $3,631,440) 3,761,621(3)
Liabilities, less cash,
receivables and other assets
[(2.5%)] (90,472)
----------
TOTAL NET ASSETS (100.0%) $3,671,149
----------
</TABLE>
SEE NOTES TO SCHEDULE OF INVESTMENTS
C-11
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger Berman
- --------------------------------------------------------------------------------
International Portfolio
<TABLE>
<CAPTION>
TOP TEN EQUITY HOLDINGS
---------------------------------------------------------------------------------------------------------------
HOLDING COUNTRY INDUSTRY PERCENTAGE
<C> <S> <C> <C> <C>
1. Softbank Corp. Japan Technology 6.1%
2. Datacraft Asia Singapore Telecommunications 3.3%
3. Vodafone AirTouch United Kingdom Telecommunications 2.8%
4. NTT Mobile Communication Network Japan Telecommunications 2.2%
5. Thomson Multimedia ADR France Electronics 2.2%
6. WPP Group United Kingdom Advertising 2.2%
7. Sage Group United Kingdom Information Technology 2.2%
8. Nokia Corp. ADR Finland Telecommunications 1.9%
9. Takeda Chemical Industries Japan Pharmaceutical 1.8%
10. Yahoo Japan Japan Technology 1.8%
</TABLE>
<TABLE>
<CAPTION>
Market
Number Value(1)
of Shares (000's omitted)
- --------------------- ---------------
<C> <S> <C>
COMMON STOCKS (90.4%)
AUSTRALIA (0.8%)
356,200 Solution 6 Holdings $ 1,794
--------
BELGIUM (1.0%)
16,260 Telinfo NV 2,368
--------
BERMUDA (0.7%)
13,200 Flag Telecom Holdings 378
27,837 Global Crossing 1,298
--------
1,676
--------
CANADA (2.0%)
43,000 BioChem Pharma 1,137
82,800 CGI Group 1,421
19,430 Nortel Networks 2,166
--------
4,724
--------
CHINA (0.5%)
4,627,000 China Shipping Development 577
1,203,000 Cosco Pacific 688
--------
1,265
--------
<CAPTION>
Market
Number Value(1)
of Shares (000's omitted)
- --------------------- ---------------
<C> <S> <C>
DENMARK (1.8%)
27,800 Navision Software $ 2,880
4,500 Vestas Wind Systems 1,268
--------
4,148
--------
FINLAND (6.9%)
3,000 Comtel Oyj 365
40,000 F-Secure 2,623
22,600 Nokia Corp. ADR 4,482
89,500 Perlos Oyj 3,961
19,800 Pohjola Group Insurance, B
Shares 1,115
50,000 Tietoenator Oyj 3,447
--------
15,993
--------
FRANCE (7.2%)
19,760 BNP 1,562
30,000 Dassault Systemes ADR 3,249
15,450 France Telecom ADR 2,542
37,500 Sanofi-Synthelabo 1,446
38,870 Thomson Multimedia ADR 5,209
22,909 Vivendi 2,695
--------
16,703
--------
</TABLE>
C-12
<PAGE>
February 29, 2000 (Unaudited)
- --------------------------------------------------------------------------------
International Portfolio (Cont'd)
<TABLE>
<CAPTION>
Market
Number Value(1)
of Shares (000's omitted)
- --------------------- ---------------
<C> <S> <C>
GERMANY (1.1%)
14,000 Siemens AG $ 2,489
--------
HONG KONG (1.8%)
824,000 Computer & Technologies
Holdings 2,440
200,000 Johnson Electric Holdings 1,291
98,000 VTech Holdings 397
--------
4,128
--------
IRELAND (0.3%)
44,200 CRH PLC 761
--------
ITALY (2.0%)
172,000 Autogrill SpA 1,768
50,000 ENI SpA 233
93,023 Telecom Italia 736
149,600 TIM SpA 2,041
--------
4,778
--------
JAPAN (30.0%)
8,200 Advantest Corp. 1,486
120,000 Bank of Tokyo-Mitsubishi 1,469
7,400 Benesse Corp. 1,482
101,000 Chugai Pharmaceutical 1,544
114,000 Daiwa Securities Group 1,810
36 Digicube Co. 1,425
7,000 Drake Beam Morin-Japan 2,612
6,000 Fancl Corp. 1,414
1,100 Hikari Tsushin 2,092
2,300 Internet Initiative Japan ADR 244
9,240 Kyocera Corp. ADR 1,700
8,000 Matsushita Communication
Industrial 1,354
77,000 Minebea Co. 886
89,000 Mitsubishi Trust & Banking 607
<CAPTION>
Market
Number Value(1)
of Shares (000's omitted)
- --------------------- ---------------
<C> <S> <C>
151,000 Mitsui Fudosan $ 1,212
104,000 Nikko Securities 1,341
72,000 Nomura Securities 2,031
63 NTT Data 1,141
165 NTT Corp. 2,282
130 NTT Mobile Communication
Network 5,241
25,000 Pasona Softbank 1,922
18,000 Seven-Eleven Japan 1,812
9,700 Softbank Corp. 14,124
12,800 Sony Corp. 3,786
77,000 SRL, Inc. 1,248
108,000 Sumitomo Bakelite 1,229
333,000 Sumitomo Realty & Development 1,009
75,000 Takeda Chemical Industries 4,232
31,900 THK Co. 1,408
3 Yahoo Japan 4,095
36,000 Yamanouchi Pharmaceutical 1,720
--------
69,958
--------
MALAYSIA (0.7%)
215,820 Malaysia WEBS Index Series 1,578
--------
MEXICO (0.2%)
122,500 Cemex SA, B Shares 530
--------
NETHERLANDS (4.0%)
10,000 Aegon NV-New York 696
28,748 Getronics NV 2,412
12,620 Philips Electronics 2,340
50,000 Versatel Telecom International 3,033
14,000 VNU NV 967
--------
9,448
--------
RUSSIA (0.2%)
19,200 Global TeleSystems Group 480
--------
</TABLE>
C-13
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger Berman
- --------------------------------------------------------------------------------
International Portfolio (Cont'd)
<TABLE>
<CAPTION>
Market
Number Value(1)
of Shares (000's omitted)
- --------------------- ---------------
<C> <S> <C>
SINGAPORE (5.8%)
10,000 Chartered Semiconductor
Manufacturing ADR $ 883
924,000 Datacraft Asia 7,808
169,000 Natsteel Electronics 1,020
251,240 Overseas Union Bank 1,115
11,300 St Assembly Test Services ADR 542
158,400 United Overseas Bank 1,002
78,000 Venture Manufacturing 1,172
--------
13,542
--------
SOUTH KOREA (1.2%)
65,000 Korea Data System 931
92,080 Medison Co. 1,205
66,000 Samsung Corp. 717
--------
2,853
--------
SPAIN (2.5%)
30,800 Banco Popular Espanol 858
15,000 Jazztel PLC ADR 1,766
36,462 Telefonica SA ADR 3,161
--------
5,785
--------
SWEDEN (3.1%)
60,000 A-Com 1,508
40,000 Allgon AB, B Shares 1,102
106,900 Assa Abloy 2,015
63,600 Skandia Forsakrings 2,609
--------
7,234
--------
SWITZERLAND (2.7%)
29,000 Carrier 1 International ADR 941
387 Disetronic Holding 2,025
300 Kudelski SA 3,226
--------
6,192
--------
<CAPTION>
Market
Number Value(1)
of Shares (000's omitted)
- --------------------- ---------------
<C> <S> <C>
UNITED KINGDOM (13.9%)
40,900 Barclays PLC $ 971
182,356 BP Amoco 1,408
130,200 British Telecom 2,271
42,000 COLT Telecom Group 2,412
33,600 Energis PLC 1,703
30,500 Glaxo Wellcome 731
240,000 Hays PLC 1,593
400,000 Sage Group 5,046
120,000 SEMA Group 2,571
50,000 Serco Group 1,823
1,600 VIA NET.WORKS 106
1,173,319 Vodafone AirTouch 6,566
266,000 WPP Group 5,129
--------
32,330
--------
TOTAL COMMON STOCKS (COST
$100,562) 210,757
--------
PREFERRED STOCKS (1.7%)
27,170 ProSieben Media, Germany
(COST $2,024) 3,889
--------
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount
- ---------------------
<C> <S> <C>
U.S. GOVERNMENT AGENCY SECURITIES (0.1%)
$ 250,000 Freddie Mac,
Discount Notes, 5.69%,
due 3/29/00 (COST $249) 249(2)
--------
</TABLE>
C-14
<PAGE>
February 29, 2000 (Unaudited)
- --------------------------------------------------------------------------------
International Portfolio (Cont'd)
<TABLE>
<CAPTION>
Market
Principal Value(1)
Amount (000's omitted)
- --------------------- ---------------
<C> <S> <C>
REPURCHASE AGREEMENTS (1.4%)
$ 3,337,000 State Street Bank and Trust
Co. Repurchase Agreement,
5.71%, due 3/1/00, dated
2/29/00, Maturity Value
$3,337,529, Collateralized by
$3,420,000 Fannie Mae, Notes,
6.40%, due 9/27/01
(Collateral Value $3,437,305)
(COST $3,337) $ 3,337(2)
--------
SHORT-TERM INVESTMENTS (11.4%)
4,000,000 Pfizer Inc., 5.70%,
due 3/2/00 3,999
3,000,000 National Australia Funding
Delaware Inc., 5.74%,
due 3/3/00 2,999
<CAPTION>
Market
Principal Value(1)
Amount (000's omitted)
- --------------------- ---------------
<C> <S> <C>
$ 5,000,000 Ford Motor Credit Co., 5.75%,
due 3/6/00 $ 4,996
3,000,000 American Express Credit Corp.,
5.74%, due 3/8/00 2,997
11,604,464 N&B Securities Lending Quality
Fund, LLC 11,604
--------
TOTAL SHORT-TERM INVESTMENTS
(COST $26,595) 26,595(2)
--------
TOTAL INVESTMENTS (105.0%)
(COST $132,767) 244,827
Liabilities, less cash,
receivables and other assets
[(5.0%)] (11,579)
--------
TOTAL NET ASSETS (100.0%) $233,248
--------
</TABLE>
SEE NOTES TO SCHEDULE OF INVESTMENTS
C-15
<PAGE>
SUMMARY SCHEDULE OF INVESTMENTS BY INDUSTRY
Neuberger Berman
- --------------------------------------------------------------------------------
International Portfolio
<TABLE>
<CAPTION>
Market
Value(1) Percentage
Industry (000's omitted) of Net Assets
- -------- --------------- ---------------
<S> <C> <C>
Telecommunications $ 49,099 21.0%
Technology 35,317 15.1%
Electronics 26,130 11.2%
Information Technology 22,086 9.5%
Other Assets-Net 18,602 8.0%
Pharmaceutical 12,058 5.2%
Banking & Financial 8,926 3.8%
Manufacturing 7,826 3.4%
Advertising 6,638 2.8%
Diversified 6,584 2.8%
Publishing & Broadcasting 4,856 2.1%
Machinery & Equipment 4,691 2.0%
Insurance 4,420 1.9%
Financial Services 3,842 1.6%
Consumer Goods & Services 3,583 1.5%
Communications 2,612 1.1%
Real Estate 2,221 1.0%
Hospital Supplies 2,025 0.9%
Commercial Services 1,922 0.8%
Industrial Goods & Services 1,823 0.8%
Retailing 1,812 0.8%
Restaurants 1,768 0.8%
Building Materials 1,291 0.6%
Medical Equipment 1,205 0.5%
Telecommunication Equipment 1,101 0.5%
Transportation 577 0.2%
Oil & Gas 233 0.1%
-------- ------
TOTAL NET ASSETS $233,248 100.0%
-------- ------
</TABLE>
C-16
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger Berman February 29, 2000 (Unaudited)
- --------------------------------------------------------------------------------
Manhattan Portfolio
<TABLE>
<CAPTION>
TOP TEN EQUITY HOLDINGS
----------------------------------------------------
HOLDING PERCENTAGE
<C> <S> <C>
1. Citrix Systems 4.4%
2. JDS Uniphase 3.2%
3. VERITAS Software 3.1%
4. PMC-Sierra 2.9%
5. PE Corp.-PE Biosystems Group 2.2%
6. Peregrine Systems 2.0%
7. Network Appliance 2.0%
8. Efficient Networks 2.0%
9. Metromedia Fiber Network 1.9%
10. Comverse Technology 1.8%
</TABLE>
<TABLE>
<CAPTION>
Market
Number Value(1)
of Shares (000's omitted)
- --------------------- ---------------
<C> <S> <C>
COMMON STOCKS (94.5%)
BUSINESS SERVICES (0.6%)
108,300 Lamar Advertising $ 4,718
40,400 Reckson Service Industries 2,174
----------
6,892
----------
CAPITAL GOODS (1.0%)
130,700 Waters Corp. 12,817
----------
COMMUNICATIONS (12.5%)
143,800 Cabletron Systems 7,046
112,200 Comverse Technology 22,089
30,700 Copper Mountain Networks 2,669
64,100 E-Tek Dynamics 17,515
149,700 Efficient Networks 24,139
150,500 JDS Uniphase 39,676
62,200 Next Level Communications 8,366
27,700 Nextel Partners 887
224,381 NTL Inc. 20,531
37,200 Redback Networks 11,104
----------
154,022
----------
</TABLE>
<TABLE>
<CAPTION>
Market
Number Value(1)
of Shares (000's omitted)
- --------------------- ---------------
<C> <S> <C>
CONSUMER CYCLICALS (8.2%)
91,100 EchoStar Communications $ 10,385
281,200 Emmis Communications 10,264
207,900 Entercom Communications 8,745
237,900 Gemstar International Group 18,051
82,700 General Motors Class H 9,965
134,200 Harley-Davidson 9,142
592,400 Park Place Entertainment 6,702
111,700 Univision Communications 11,379
193,600 USA Networks 4,344
171,600 Westwood One 11,465
----------
100,442
----------
ELECTRICAL EQUIPMENT (11.6%)
191,900 Altera Corp. 15,304
123,800 Analog Devices 19,437
68,600 Broadcom Corp. 13,540
166,900 Conexant Systems 16,398
185,100 KLA-Tencor 14,426
173,800 Maxim Integrated Products 11,612
182,000 PMC-Sierra 35,137
212,200 Xilinx Inc. 16,923
----------
142,777
----------
ENERGY (3.1%)
191,500 Calpine Corporation 17,522
213,900 Coastal Corp. 8,997
65,800 Cooper Cameron 3,636
137,100 Rowan Companies 3,445
484,300 Union Pacific Resources Group 4,328
----------
37,928
----------
</TABLE>
C-17
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger Berman
- --------------------------------------------------------------------------------
Manhattan Portfolio (Cont'd)
<TABLE>
<CAPTION>
Market
Number Value(1)
of Shares (000's omitted)
- --------------------- ---------------
<C> <S> <C>
FINANCE (0.4%)
84,000 eSPEED, Inc. $ 5,203
----------
FINANCIAL SERVICES (2.2%)
181,800 Capital One Financial 6,693
219,700 E*TRADE Group 5,410
96,900 Lehman Brothers Holdings 7,025
116,600 Providian Financial 7,557
----------
26,685
----------
HARDWARE (5.2%)
186,400 Flextronics International 11,347
131,700 Network Appliance 24,858
56,800 QLogic Corp. 8,861
156,300 Sanmina Corp. 18,297
----------
63,363
----------
HEALTH CARE (10.2%)
150,500 Biogen, Inc. 16,245
5,200 Celera Genomics 1,269
79,400 HealthAxis, Inc. 2,313
39,000 Human Genome Sciences 8,512
76,300 Immunex Corp. 15,064
83,800 MedImmune, Inc. 16,634
144,500 MiniMed Inc. 14,432
256,000 PE Corp.-PE Biosystems Group 27,008
144,700 QLT PhotoTherapeutics 10,328
128,200 Sepracor Inc. 12,996
----------
124,801
----------
INTERNET (14.7%)
44,600 Art Technology Group 6,445
61,100 BroadVision, Inc. 15,431
105,700 CheckFree Holdings 9,295
51,000 Clarent Corp. 5,572
14,400 Commerce One 3,008
104,200 Digex, Inc. 16,880
</TABLE>
<TABLE>
<CAPTION>
Market
Number Value(1)
of Shares (000's omitted)
- --------------------- ---------------
<C> <S> <C>
92,900 DoubleClick Inc. $ 8,251
19,700 FreeMarkets, Inc. 3,431
111,100 Healtheon Corp. 6,145
337,100 Intuit Inc. 17,698
89,700 Phone.com 12,524
202,400 Portal Software 15,205
324,600 PSINet Inc. 15,053
85,150 PurchasePro.com 10,383
78,400 S1 Corp. 7,889
78,900 Safeguard Scientifics 13,803
25,400 VeriSign, Inc. 6,426
29,000 Vignette Corp. 6,685
----------
180,124
----------
RETAIL (4.0%)
257,500 Best Buy 14,002
146,700 BJ's Wholesale Club 4,548
213,200 Circuit City Stores 8,608
179,200 Limited, Inc. 6,093
253,500 Starbucks Corp. 8,904
105,200 Tiffany & Co. 6,752
----------
48,907
----------
SOFTWARE (15.1%)
70,500 Adobe Systems 7,191
133,600 Bea Systems 16,909
510,800 Citrix Systems 53,857
88,800 Micromuse Inc. 12,593
457,200 Peregrine Systems 24,975
165,600 Rational Software 11,778
145,700 Siebel Systems 20,207
189,450 VERITAS Software 37,487
----------
184,997
----------
TELECOMMUNICATIONS (5.7%)
114,000 Covad Communications Group 10,288
231,700 Intermedia Communications 14,670
326,200 Metromedia Fiber Network 23,451
</TABLE>
C-18
<PAGE>
February 29, 2000 (Unaudited)
- --------------------------------------------------------------------------------
Manhattan Portfolio (Cont'd)
<TABLE>
<CAPTION>
Market
Number Value(1)
of Shares (000's omitted)
- --------------------- ---------------
<C> <S> <C>
76,100 VoiceStream Wireless $ 10,126
146,900 WinStar Communications 11,366
----------
69,901
----------
TOTAL COMMON STOCKS (COST
$572,842) 1,158,859
----------
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount
- ---------------------
- --------------------- ---------------
<C> <S> <C>
REPURCHASE AGREEMENTS (2.4%)
$ 29,645,000 State Street Bank and Trust
Co. Repurchase Agreement,
5.71%, due 3/1/00, dated
2/29/00, Maturity Value
$29,649,702, Collateralized
by $30,385,000 Fannie Mae,
Notes, 6.40%, due 9/27/01
(Collateral Value
$30,538,748) (COST $29,645) 29,645(2)
----------
</TABLE>
<TABLE>
<CAPTION>
Market
Principal Value(1)
Amount (000's omitted)
- --------------------- ---------------
<C> <S> <C>
SHORT-TERM INVESTMENTS (20.9%)
$ 7,000,000 Ford Motor Credit Co., 5.75%,
due 3/6/00 $ 6,994
10,000,000 American Express Credit Corp.,
5.74%, due 3/8/00 9,989
20,000,000 General Electric Capital
Corp., 5.75%, due 3/8/00 19,978
219,242,815 N&B Securities Lending Quality
Fund, LLC 219,243
----------
TOTAL SHORT-TERM INVESTMENTS
(COST $256,204) 256,204(2)
----------
TOTAL INVESTMENTS (117.8%)
(COST $858,691) 1,444,708(3)
Liabilities, less cash,
receivables and other assets
[(17.8%)] (218,172)
----------
TOTAL NET ASSETS (100.0%) $1,226,536
----------
</TABLE>
SEE NOTES TO SCHEDULE OF INVESTMENTS
C-19
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger Berman
- --------------------------------------------------------------------------------
Millennium Portfolio
<TABLE>
<CAPTION>
TOP TEN EQUITY HOLDINGS
----------------------------------------------------
HOLDING PERCENTAGE
<C> <S> <C>
1. Osicom Technologies 3.4%
2. Efficient Networks 3.1%
3. CAIS Internet 2.5%
4. Pinnacle Holdings 2.4%
5. Active Software 2.3%
6. Lifeminders.com 2.1%
7. Digex, Inc. 2.1%
8. Netopia, Inc. 2.1%
9. IONA Technologies ADR 2.1%
10. Artisan Components 2.0%
</TABLE>
<TABLE>
<CAPTION>
Market
Number Value(1)
of Shares (000's omitted)
- --------------------- ---------------
<C> <S> <C>
COMMON STOCKS (98.7%)
BUSINESS SERVICES (4.2%)
154,700 Circle.com $ 1,460
217,500 Corinthian Colleges 3,888
109,350 Iron Mountain 3,335
104,700 Luminant Worldwide 2,565
91,300 Official Payments 3,276
300 Onvia.com 6
--------
14,530
--------
BUSINESS SERVICES - GENERAL BUSINESS SERVICES (1.4%)
608,500 Strategic Diagnostics 4,830
--------
BUSINESS SERVICES - IT BUSINESS SERVICES (0.7%)
140,500 Hall, Kinion & Associates 2,529
--------
CONSUMER CYCLICAL - CONSUMER MEDIA (2.5%)
92,300 Citadel Communications 3,127
51,400 Emmis Communications 1,876
29,800 Pegasus Communications 3,695
--------
8,698
--------
<CAPTION>
Market
Number Value(1)
of Shares (000's omitted)
- --------------------- ---------------
<C> <S> <C>
CONSUMER CYCLICAL - LEISURE & CONSUMER SERVICE (0.9%)
147,100 Premier Parks $ 2,979
--------
ENERGY (3.5%)
71,500 Hanover Compressor 3,356
66,900 Independent Energy Holdings
ADR 3,349
102,200 Maverick Tube 2,300
127,800 Patterson Energy 2,915
--------
11,920
--------
FINANCIAL SERVICES (5.8%)
82,800 Affiliated Managers Group 3,255
50,952 Digital Insight 3,210
79,650 eSPEED, Inc. 4,933
165,400 Netzee, Inc. 4,238
197,200 SierraCities.com 4,166
--------
19,802
--------
HARDWARE (0.9%)
32,600 DII Group 3,152
--------
HEALTH CARE (9.0%)
14,000 Abgenix, Inc. 4,510
61,200 Allscripts, Inc. 4,223
70,500 Anesta Corp. 1,569
37,100 ArthroCare Corp. 4,582
120,700 ChromaVision Medical Systems 2,482
49,500 Enzon, Inc. 2,871
12,800 Human Genome Sciences 2,793
95,100 INAMED Corp. 3,602
51,900 Pharmacyclics, Inc. 4,142
--------
30,774
--------
INTERNET (9.5%)
94,800 About.com 6,660
301,800 Cybergold, Inc. 6,036
25,000 InterVU Inc. 3,698
138,200 Lifeminders.com 7,342
120,200 Marketing Services Group 3,185
117,100 MyPoints.com 5,489
--------
32,410
--------
</TABLE>
C-20
<PAGE>
February 29, 2000 (Unaudited)
- --------------------------------------------------------------------------------
Millennium Portfolio (Cont'd)
<TABLE>
<CAPTION>
Market
Number Value(1)
of Shares (000's omitted)
- --------------------- ---------------
<C> <S> <C>
RETAIL (3.6%)
96,400 American Eagle Outfitters $ 2,458
152,300 Factory 2-U Stores 3,693
100,100 Insight Enterprises 3,141
210,400 Steven Madden 2,840
--------
12,132
--------
SEMICONDUCTORS (6.5%)
97,600 Asyst Technologies 4,477
20,400 Cree, Inc. 3,833
95,200 Cypress Semiconductor 4,343
46,000 Elantec Semiconductor 2,895
60,900 Helix Technology 4,332
48,600 Zoran Corp. 2,479
--------
22,359
--------
SOFTWARE (9.0%)
75,100 Active Software 7,885
74,100 Actuate Software 4,622
114,400 BindView Development 3,861
42,600 PC-Tel 2,897
47,000 Project Software & Development 3,639
56,500 Radiant Systems 2,889
77,200 Visual Networks 5,076
--------
30,869
--------
TECHNOLOGY - HARDWARE (16.1%)
71,800 AudioCodes Ltd. 5,547
65,500 Efficient Networks 10,562
20,000 Extended Systems 2,035
53,800 Mercury Computer Systems 2,592
42,000 Natural MicroSystems 2,678
84,300 Netopia, Inc. 7,271
81,100 Osicom Technologies 11,754
<CAPTION>
Market
Number Value(1)
of Shares (000's omitted)
- --------------------- ---------------
<C> <S> <C>
61,200 SonicWALL, Inc. $ 5,539
34,000 Virata Corp. 5,015
65,500 Westell Technologies 2,243
--------
55,236
--------
TECHNOLOGY - SEMICONDUCTOR (4.4%)
270,800 Artisan Components 6,872
171,100 Integrated Device Technology 6,309
25,000 Kopin Corp. 1,853
--------
15,034
--------
TECHNOLOGY - SOFTWARE (6.1%)
27,100 Allaire Corp. 3,506
83,300 IONA Technologies ADR 7,060
52,500 Netegrity, Inc. 4,489
137,800 SERENA Software 5,813
--------
20,868
--------
TELECOMMUNICATIONS (14.6%)
47,200 AirGate PCS 4,626
83,100 C-COR.net 3,716
225,500 CAIS Internet 8,625
45,300 Digex, Inc. 7,339
41,500 Digital Island 4,819
78,300 Eloquent, Inc. 2,633
109,500 Network Plus 4,223
30,100 Nextel Partners 963
137,700 Pinnacle Holdings 8,055
7,900 Teltrend Inc. 837
53,000 Time Warner Telecom 4,081
--------
49,917
--------
TOTAL COMMON STOCKS (COST
$211,549) 338,039
--------
</TABLE>
C-21
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger Berman February 29, 2000 (Unaudited)
- --------------------------------------------------------------------------------
Millennium Portfolio (Cont'd)
<TABLE>
<CAPTION>
Market
Principal Value(1)
Amount (000's omitted)
- --------------------- ---------------
<C> <S> <C>
REPURCHASE AGREEMENTS (2.9%)
$ 9,906,000 State Street Bank and Trust
Co. Repurchase Agreement,
5.71%, due 3/1/00, dated
2/29/00, Maturity Value
$9,907,571, Collateralized by
$10,155,000 Fannie Mae,
Notes, 6.40%, due 9/27/01
(Collateral Value
$10,206,384) (COST $9,906) $ 9,906(2)
--------
</TABLE>
<TABLE>
<CAPTION>
Market
Principal Value(1)
Amount (000's omitted)
- --------------------- ---------------
<C> <S> <C>
SHORT-TERM INVESTMENTS (12.6%)
$43,222,736 N&B Securities Lending Quality
Fund, LLC (COST $43,223) $ 43,223(2)
--------
TOTAL INVESTMENTS (114.2%)
(COST $264,678) 391,168(3)
Liabilities, less cash,
receivables and other assets
[(14.2%)] (48,492)
--------
TOTAL NET ASSETS (100.0%) $342,676
--------
</TABLE>
SEE NOTES TO SCHEDULE OF INVESTMENTS
C-22
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger Berman February 29, 2000 (Unaudited)
- --------------------------------------------------------------------------------
Partners Portfolio
<TABLE>
<CAPTION>
TOP TEN EQUITY HOLDINGS
----------------------------------------------------
HOLDING PERCENTAGE
<C> <S> <C>
1. L.M. Ericsson Telephone, B Shares ADR 3.1%
2. CIGNA Corp. 3.0%
3. News Corp. ADR 3.0%
4. GTE Corp. 2.6%
5. IBM 2.6%
6. The Williams Cos. 2.4%
7. Honeywell International 2.3%
8. Parametric Technology 2.3%
9. Computer Associates 2.3%
10. Bank of New York 2.3%
</TABLE>
<TABLE>
<CAPTION>
Market
Number Value(1)
of Shares (000's omitted)
- --------------------- ---------------
<C> <S> <C>
COMMON STOCKS (95.3%)
AEROSPACE (2.3%)
1,423,000 Honeywell International $ 68,482
----------
AIRLINES (1.5%)
393,000 AMR Corp. 20,780
771,200 Continental Airlines Class B 24,389
----------
45,169
----------
AUTOMOBILE MANUFACTURING (1.7%)
657,000 General Motors 49,973
----------
AUTO/TRUCK REPLACEMENT PARTS (0.8%)
1,090,000 Lear Corp. 23,026
----------
BANKING & FINANCIAL (6.8%)
2,025,000 Bank of New York 67,458
770,000 Chase Manhattan 61,311
284,100 Citigroup Inc. 14,684
1,337,000 Countrywide Credit Industries 33,342
675,000 Wells Fargo 22,317
----------
199,112
----------
<CAPTION>
Market
Number Value(1)
of Shares (000's omitted)
- --------------------- ---------------
<C> <S> <C>
CHEMICALS (2.9%)
614,000 Alcoa Inc. $ 42,059
855,000 duPont 43,177
----------
85,236
----------
COMMUNICATIONS (3.0%)
570,000 Bell Atlantic 27,894
1,360,000 MCI WorldCom 60,690
----------
88,584
----------
ENERGY (1.6%)
175,000 AES Corp. 14,667
660,000 Duke Energy 32,010
----------
46,677
----------
FINANCIAL SERVICES (2.1%)
2,150,000 Ceridian Corp. 42,597
593,000 SLM Holding 18,568
----------
61,165
----------
FOOD & TOBACCO (3.0%)
839,000 Anheuser-Busch 53,801
1,197,900 Nabisco Holdings 35,039
----------
88,840
----------
FOOD PRODUCTS (2.0%)
4,000,000 Kroger Co. 59,500
----------
GAS (1.8%)
1,572,100 Praxair, Inc. 53,058
----------
HEALTH CARE (11.3%)
942,000 American Home Products 40,977
1,020,300 Bristol-Myers Squibb 57,966
1,200,000 CIGNA Corp. 88,575
706,400 Johnson & Johnson 50,684
5,500 MedicaLogic, Inc. 204
955,000 Merck & Co. 58,792
547,900 Wellpoint Health Networks 36,984
----------
334,182
----------
</TABLE>
C-23
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger Berman
- --------------------------------------------------------------------------------
Partners Portfolio (Cont'd)
<TABLE>
<CAPTION>
Market
Number Value(1)
of Shares (000's omitted)
- --------------------- ---------------
<C> <S> <C>
INDUSTRIAL GOODS & SERVICES (2.8%)
1,485,000 General Dynamics $ 64,226
357,200 Phelps Dodge 16,833
----------
81,059
----------
INSURANCE (5.6%)
1,544,000 Ace, Ltd. 27,599
650,000 American International Group 57,485
1,465,700 Aon Corp. 30,688
1,183,359 XL Capital 47,852
----------
163,624
----------
MEDIA & ENTERTAINMENT (1.8%)
1,570,000 Walt Disney 52,595
----------
OIL & GAS (9.2%)
540,000 Chevron Corp. 40,331
735,000 Exxon Mobil 55,355
870,000 Halliburton Co. 33,223
913,200 Texaco Inc. 43,320
800,000 Total Fina ADR 53,700
1,158,000 Transocean Sedco Forex 45,669
----------
271,598
----------
PAPER & FOREST PRODUCTS (2.5%)
478,500 Georgia-Pacific 16,598
1,095,000 Weyerhaeuser Co. 56,187
----------
72,785
----------
RAILROADS (0.2%)
305,300 Burlington Northern Santa Fe 6,011
----------
RETAILING (0.6%)
1,620,000 Consolidated Stores 18,225
----------
TECHNOLOGY (19.5%)
1,980,000 Cadence Design Systems 39,476
1,058,000 Computer Associates 68,043
<CAPTION>
Market
Number Value(1)
of Shares (000's omitted)
- --------------------- ---------------
<C> <S> <C>
540,000 Computer Sciences $ 42,559
505,000 General Motors Class H 60,853
750,000 IBM 76,500
961,000 L.M. Ericsson Telephone, B
Shares ADR 92,256
225,000 Micron Technology 22,064
175,000 Motorola, Inc. 29,837
39,200 Network Solutions 12,639
1,142,400 Novell, Inc. 37,771
2,245,000 Parametric Technology 68,052
798,600 Unisys Corp. 23,908
5,000 VIA NET.WORKS 330
----------
574,288
----------
TELECOMMUNICATIONS (7.7%)
176,550 Allegiance Telecom 17,456
1,045,000 AT&T Corp.-Liberty Media Group
Class A 54,601
297,800 Global Crossing 13,885
1,323,100 GTE Corp. 78,063
468,000 Nextel Communications 63,999
----------
228,004
----------
UTILITIES (4.6%)
998,400 Edison International 26,270
1,695,000 The Williams Cos. 70,872
1,010,000 Unicom Corp. 38,191
----------
135,333
----------
TOTAL COMMON STOCKS (COST
$2,686,567) 2,806,526
----------
PREFERRED STOCKS (3.0%)
1,752,000 News Corp. ADR (COST $46,209) 88,147
----------
</TABLE>
C-24
<PAGE>
February 29, 2000 (Unaudited)
- --------------------------------------------------------------------------------
Partners Portfolio (Cont'd)
<TABLE>
<CAPTION>
Market
Principal Value(1)
Amount (000's omitted)
- --------------------- ---------------
<C> <S> <C>
REPURCHASE AGREEMENTS (1.0%)
$ 29,395,000 State Street Bank and Trust
Co. Repurchase Agreement,
5.71%, due 3/1/00, dated
2/29/00, Maturity Value
$29,399,662, Collateralized
by $30,125,000 Fannie Mae,
Notes, 6.40%, due 9/27/01
(Collateral Value
$30,277,433) (COST $29,395) $ 29,395(2)
----------
<CAPTION>
Market
Principal Value(1)
Amount (000's omitted)
- --------------------- ---------------
<C> <S> <C>
SHORT-TERM INVESTMENTS (3.4%)
$101,394,544 N&B Securities Lending Quality
Fund, LLC (COST $101,395) $ 101,395(2)
----------
TOTAL INVESTMENTS (102.7%)
(COST $2,863,566) 3,025,463(3)
Liabilities, less cash,
receivables and other assets
[(2.7%)] (79,167)
----------
TOTAL NET ASSETS (100.0%) $2,946,296
----------
</TABLE>
SEE NOTES TO SCHEDULE OF INVESTMENTS
C-25
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger Berman
- --------------------------------------------------------------------------------
Regency Portfolio
<TABLE>
<CAPTION>
TOP TEN EQUITY HOLDINGS
----------------------------------------------------
HOLDING PERCENTAGE
<C> <S> <C>
1. American Tower 2.6%
2. Comdisco, Inc. 2.3%
3. Parametric Technology 2.2%
4. General Motors Class H 2.2%
5. Cabletron Systems 2.2%
6. General Dynamics 2.1%
7. Dynegy Inc. 2.1%
8. SPX Corp. 2.1%
9. Coastal Corp. 2.0%
10. Genzyme Corp. 2.0%
</TABLE>
<TABLE>
<CAPTION>
Market
Number Value(1)
of Shares (000's omitted)
- --------------------- ---------------
<C> <S> <C>
COMMON STOCKS (94.4%)
AIRLINES (1.0%)
11,300 Continental Airlines Class B $ 357
-------
AUTOMOTIVE (1.5%)
24,800 Lear Corp. 524
-------
BANKING & FINANCIAL (4.3%)
15,400 Countrywide Credit Industries 384
12,400 FleetBoston Financial 338
41,000 IndyMac Mortgage Holdings 520
10,700 Valley National Bancorp 248
-------
1,490
-------
CHEMICALS (2.1%)
9,700 Lyondell Chemical 83
6,800 Waters Corp. 667
-------
750
-------
</TABLE>
<TABLE>
<CAPTION>
Market
Number Value(1)
of Shares (000's omitted)
- --------------------- ---------------
<C> <S> <C>
CONSUMER PRODUCTS & SERVICES (2.8%)
17,200 Maytag Corp. $ 455
5,400 Sealed Air 268
19,300 Smurfit-Stone Container 263
-------
986
-------
ELECTRICAL & ELECTRONICS (2.6%)
2,400 AES Corp. 201
8,300 National Semiconductor 624
8,600 Niagara Mohawk Holdings 101
-------
926
-------
ENERGY (2.0%)
16,800 Coastal Corp. 707
-------
ENTERTAINMENT (1.5%)
23,700 Starwood Hotels & Resorts
Worldwide 532
-------
FINANCIAL SERVICES (7.4%)
8,500 Ambac Financial Group 374
25,300 Ceridian Corp. 501
3,000 Citigroup Inc. 155
12,800 Dun & Bradstreet 335
18,800 FINOVA Group 538
3,900 Kansas City Southern
Industries 307
12,400 SLM Holding 388
-------
2,598
-------
GAS (1.6%)
16,600 Praxair, Inc. 560
-------
HEALTH CARE (7.9%)
17,600 Becton, Dickinson & Co. 547
8,200 Bristol-Myers Squibb 466
12,200 Genzyme Corp. 701
</TABLE>
C-26
<PAGE>
February 29, 2000 (Unaudited)
- --------------------------------------------------------------------------------
Regency Portfolio (Cont'd)
<TABLE>
<CAPTION>
Market
Number Value(1)
of Shares (000's omitted)
- --------------------- ---------------
<C> <S> <C>
7,300 Neoforma.com $ 434
9,500 Wellpoint Health Networks 641
-------
2,789
-------
INDUSTRIAL GOODS & SERVICES (7.3%)
7,800 American Standard 272
10,200 Bowater Inc. 502
19,500 Fort James 367
17,200 General Dynamics 744
4,200 Phelps Dodge 198
5,800 Reynolds Metals 368
6,500 UCAR International 99
-------
2,550
-------
INSURANCE (3.6%)
30,200 Ace, Ltd. 540
17,200 Aon Corp. 360
8,600 XL Capital 348
-------
1,248
-------
MACHINERY & EQUIPMENT (4.6%)
4,900 Danaher Corp. 200
4,700 Eaton Corp. 352
7,200 Grainger, Inc. 308
8,500 SPX Corp. 740
-------
1,600
-------
MEDIA (0.9%)
6,900 E.W. Scripps 298
-------
OIL & GAS (10.6%)
13,300 Anadarko Petroleum 409
11,500 Apache Corp. 420
15,863 Dynegy Inc. 743
13,100 Kinder Morgan 365
12,600 Noble Drilling 454
11,800 Tosco Corp. 316
14,500 Transocean Sedco Forex 572
21,200 USX-Marathon Group 458
-------
3,737
-------
</TABLE>
<TABLE>
<CAPTION>
Market
Number Value(1)
of Shares (000's omitted)
- --------------------- ---------------
<C> <S> <C>
RETAILING (3.2%)
35,700 Consolidated Stores $ 402
10,400 Harcourt General 358
35,600 W.R. Grace 358
-------
1,118
-------
TECHNOLOGY (15.9%)
9,600 ANTEC Corp. 508
15,600 Cabletron Systems 765
31,200 Cadence Design Systems 622
20,900 Comdisco, Inc. 803
6,400 General Motors Class H 771
400 Network Solutions 129
9,900 Novell, Inc. 327
25,800 Parametric Technology 782
5,600 PSINet Inc. 260
20,000 SunGard Data Systems 600
-------
5,567
-------
TELECOMMUNICATIONS (9.9%)
39,100 A.H. Belo 503
18,500 American Tower 911
8,500 AT&T Corp.- Liberty Media
Group Class A 444
4,100 EchoStar Communications 467
11,700 Global Crossing 546
4,100 Metromedia Fiber Network 295
4,200 WinStar Communications 325
-------
3,491
-------
</TABLE>
C-27
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger Berman February 29, 2000 (Unaudited)
- --------------------------------------------------------------------------------
Regency Portfolio (Cont'd)
<TABLE>
<CAPTION>
Market
Number Value(1)
of Shares (000's omitted)
- --------------------- ---------------
<C> <S> <C>
UTILITIES (3.7%)
8,100 Cinergy Corp. $ 173
14,800 The Williams Cos. 619
13,700 Unicom Corp. 518
-------
1,310
-------
TOTAL COMMON STOCKS (COST
$31,720) 33,138
-------
PREFERRED STOCKS (1.8%)
12,300 News Corp. ADR (COST $339) 619
-------
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount
- ---------------------
<C> <S> <C>
U.S. GOVERNMENT AGENCY SECURITIES (2.0%)
$ 700,000 Federal Home Loan Bank,
Discount Notes, 5.72%,
due 3/1/00 (COST $700) 700(2)
-------
REPURCHASE AGREEMENTS (3.3%)
1,154,000 State Street Bank and Trust
Co. Repurchase Agreement,
5.71%, due 3/1/00, dated
2/29/00, Maturity Value
$1,154,183, Collateralized by
$1,185,000 Fannie Mae, Notes,
6.40%, due 9/27/01
(Collateral Value $1,190,996)
(COST $1,154) 1,154(2)
-------
</TABLE>
<TABLE>
<CAPTION>
Market
Principal Value(1)
Amount (000's omitted)
- --------------------- ---------------
<C> <S> <C>
SHORT-TERM INVESTMENTS (3.5%)
$1,245,032 N&B Securities Lending Quality
Fund, LLC (COST $1,245) $ 1,245(2)
-------
TOTAL INVESTMENTS
(105.0%) (COST $35,158) 36,856(3)
Liabilities, less cash,
receivables and other assets
[(5.0%)] (1,740)
-------
TOTAL NET ASSETS (100.0%) $35,116
-------
</TABLE>
SEE NOTES TO SCHEDULE OF INVESTMENTS
C-28
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger Berman February 29, 2000 (Unaudited)
- --------------------------------------------------------------------------------
Socially Responsive Portfolio
<TABLE>
<CAPTION>
TOP TEN EQUITY HOLDINGS
----------------------------------------------------
HOLDING PERCENTAGE
<C> <S> <C>
1. Hewlett-Packard 5.4%
2. Intel Corp. 5.1%
3. Electronic Data Systems 4.1%
4. Citigroup Inc. 4.0%
5. Cooper Cameron 3.6%
6. AT&T Corp. 3.2%
7. Warner-Lambert 2.9%
8. MCI WorldCom 2.9%
9. Biogen, Inc. 2.8%
10. Kimberly-Clark 2.6%
</TABLE>
<TABLE>
<CAPTION>
Market
Number Value(1)
of Shares (000's omitted)
- --------------------- ---------------
<C> <S> <C>
COMMON STOCKS (99.0%)
ADVERTISING (2.0%)
67,900 True North Communications $ 2,512
--------
BASIC MATERIALS (2.0%)
36,600 Alcoa Inc. 2,507
--------
CHEMICALS (4.8%)
75,000 International Flavors &
Fragrances 2,250
36,300 Minerals Technologies 1,473
70,700 Praxair, Inc. 2,386
--------
6,109
--------
CONSUMER GOODS & SERVICES (4.8%)
65,300 Kimberly-Clark 3,375
100,000 Marriott International 2,756
--------
6,131
--------
DIVERSIFIED (4.1%)
48,800 Danaher Corp. 1,992
87,100 Tyco International 3,304
--------
5,296
--------
ENERGY (1.8%)
50,000 BP Amoco ADR 2,350
--------
</TABLE>
<TABLE>
<CAPTION>
Market
Number Value(1)
of Shares (000's omitted)
- --------------------- ---------------
<C> <S> <C>
ENTERTAINMENT (2.6%)
127,000 Fox Entertainment Group $ 3,342
--------
FINANCIAL SERVICES (8.3%)
37,600 Chase Manhattan 2,994
98,950 Citigroup Inc. 5,115
46,800 Fannie Mae 2,480
--------
10,589
--------
FOOD & BEVERAGE (0.8%)
66,400 Sara Lee 996
--------
HEALTH CARE (9.2%)
32,600 Biogen, Inc. 3,519
22,800 Johnson & Johnson 1,636
42,800 Warner-Lambert 3,662
42,900 Wellpoint Health Networks 2,895
--------
11,712
--------
INSURANCE (6.3%)
27,000 American International Group 2,388
60,000 HealthAxis, Inc. 1,747
30,200 Progressive Corp. 1,797
76,200 ReliaStar Financial 2,129
--------
8,061
--------
OIL & GAS (9.7%)
90,500 Anadarko Petroleum 2,783
83,500 Cooper Cameron 4,613
47,300 Enron Corp. 3,264
50,600 Nabors Industries 1,815
--------
12,475
--------
PAPER & FOREST PRODUCTS (1.3%)
53,700 Mead Corp. 1,608
--------
PUBLISHING & BROADCASTING (1.8%)
81,700 Valassis Communications 2,262
--------
</TABLE>
C-29
<PAGE>
SCHEDULE OF INVESTMENTS
Neuberger Berman February 29, 2000 (Unaudited)
- --------------------------------------------------------------------------------
Socially Responsive Portfolio (Cont'd)
<TABLE>
RETAIL (3.7%)
<CAPTION>
Market
Number Value(1)
of Shares (000's omitted)
- --------------------- ---------------
<C> <S> <C>
71,700 Safeway Inc. $ 2,765
33,600 Target Corp. 1,982
--------
4,747
--------
RETAIL STORES (1.7%)
60,700 Federated Department Stores 2,227
--------
RETAILING (1.5%)
40,000 Wal-Mart Stores 1,947
--------
TECHNOLOGY (20.4%)
110,700 Compaq Computer 2,754
81,100 Electronic Data Systems 5,251
51,700 Hewlett-Packard 6,954
25,000 IBM 2,550
58,100 Intel Corp. 6,565
60,000 Novell, Inc. 1,984
--------
26,058
--------
TELECOMMUNICATIONS (9.8%)
83,200 AT&T Corp. 4,113
45,500 Bell Atlantic 2,227
81,900 MCI WorldCom 3,655
33,000 Metricom, Inc. 2,570
--------
12,565
--------
TRANSPORTATION (2.4%)
58,100 AMR Corp. 3,072
--------
TOTAL COMMON STOCKS (COST
$106,437) 126,566
--------
</TABLE>
<TABLE>
<CAPTION>
Market
Principal Value(1)
Amount (000's omitted)
- --------------------- ---------------
<C> <S> <C>
REPURCHASE AGREEMENTS (0.8%)
$1,023,000 State Street Bank and Trust
Co. Repurchase Agreement,
5.71%, due 3/1/00, dated
2/29/00, Maturity Value
$1,046,166, Collateralized by
$1,075,000 Fannie Mae, Notes,
6.40%, due 9/27/01
(Collateral Value $1,080,440)
(COST $1,023) $ 1,023(2)
--------
SHORT-TERM INVESTMENTS (1.9%)
100,000 Community Capital Bank, 4.20%,
due 3/31/00 100
100,000 Self Help Credit Union, 5.46%,
due 5/22/00 100
2,214,967 N&B Securities Lending Quality
Fund, LLC 2,215
--------
TOTAL SHORT-TERM INVESTMENTS
(COST $2,415) 2,415(2)
--------
TOTAL INVESTMENTS (101.7%)
(COST $109,875) 130,004(3)
Liabilities, less cash,
receivables and other assets
[(1.7%)] (2,135)
--------
TOTAL NET ASSETS (100.0%) $127,869
--------
</TABLE>
SEE NOTES TO SCHEDULE OF INVESTMENTS
C-30
<PAGE>
NOTES TO SCHEDULE OF INVESTMENTS
February 29, 2000 (Unaudited)
- ----------------------------------------------------------------------
Equity Managers Trust and Global Managers Trust
1) Investment securities of each Portfolio are valued at the latest sales price;
securities for which no sales were reported, unless otherwise noted, are
valued at the mean between the closing bid and asked prices, with the
exception of securities held by Neuberger Berman International Portfolio,
which are valued at the last available bid price. The Portfolios value all
other securities by a method the trustees of Equity Managers Trust or Global
Managers Trust believe accurately reflects fair value. Foreign security
prices are furnished by independent quotation services expressed in local
currency values. Foreign security prices are translated from the local
currency into U.S. dollars using current exchange rates. Short-term debt
securities with less than 60 days until maturity may be valued at cost which,
when combined with interest earned, approximates market value.
2) At cost, which approximates market value.
3) At February 29, 2000, selected Portfolio information on a U.S. Federal income
tax basis was as follows:
<TABLE>
<CAPTION>
GROSS GROSS
UNREALIZED UNREALIZED NET UNREALIZED
NEUBERGER BERMAN COST APPRECIATION DEPRECIATION APPRECIATION
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------
CENTURY PORTFOLIO $ 30,982,000 $ 4,619,000 $ 1,238,000 $ 3,381,000
FOCUS PORTFOLIO 1,104,958,000 732,439,000 105,424,000 627,015,000
GENESIS PORTFOLIO 1,396,697,000 329,645,000 144,978,000 184,667,000
GUARDIAN PORTFOLIO 3,631,665,000 600,113,000 470,157,000 129,956,000
MANHATTAN PORTFOLIO 858,802,000 604,639,000 18,733,000 585,906,000
MILLENNIUM PORTFOLIO 264,713,000 131,509,000 5,054,000 126,455,000
PARTNERS PORTFOLIO 2,867,056,000 417,728,000 259,321,000 158,407,000
REGENCY PORTFOLIO 35,162,000 5,794,000 4,100,000 1,694,000
SOCIALLY RESPONSIVE PORTFOLIO 109,875,000 28,627,000 8,498,000 20,129,000
</TABLE>
4) Affiliated issuer (see Note E of Notes to Financial Statements).
5) The following securities were held in escrow at February 29, 2000, to cover
outstanding call options written:
<TABLE>
<CAPTION>
PREMIUM
SECURITIES AND MARKET VALUE ON MARKET VALUE
NEUBERGER BERMAN SHARES OPTIONS OF SECURITIES OPTIONS OF OPTIONS
<S> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------
GUARDIAN PORTFOLIO 311,500 Warner-Lambert $26,653,000 $1,889,000 $ 642,000
July 2000 @ 105
100,000 Wellpoint Health 6,750,000 893,000 1,838,000
Networks
April 2000 @ 50
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
C-31
<PAGE>
STATEMENTS OF ASSETS AND LIABILITIES
- ----------------------------------------------------------------------
<TABLE>
<CAPTION>
EQUITY MANAGERS TRUST
----------------------------------------------------------
CENTURY FOCUS GENESIS GUARDIAN
(000's omitted) PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
<S> <C> <C> <C> <C>
----------------------------------------------------------
ASSETS
Investments in securities, at market value*
(Notes A & E) -- see Schedule of
Investments:
Unaffiliated issuers $ 34,363 $ 1,690,323 $ 1,487,748 $ 3,761,621
Non-controlled affiliated issuers -- 41,650 93,616 --
----------------------------------------------------------
34,363 1,731,973 1,581,364 3,761,621
Cash 1 -- 1 --
Dividends and interest receivable 12 679 1,610 5,701
Prepaid expenses and other assets -- 24 46 127
Receivable for option contracts written -- 8 -- --
Receivable for securities sold 124 10,010 22,492 33,983
Receivable for variation margin (Note A) -- -- -- --
----------------------------------------------------------
34,500 1,742,694 1,605,513 3,801,432
----------------------------------------------------------
LIABILITIES
Option contracts written, at market value
(Note A) -- -- -- 2,480
Payable for collateral on securities loaned
(Note A) 2,493 6,891 47,518 58,320
Payable for securities purchased 1,004 5,713 18,981 67,716
Payable to investment manager (Note B) 12 636 878 1,369
Accrued expenses and other payables 24 163 331 398
----------------------------------------------------------
3,533 13,403 67,708 130,283
----------------------------------------------------------
NET ASSETS Applicable to Investors' Beneficial
Interests $ 30,967 $ 1,729,291 $ 1,537,805 $ 3,671,149
----------------------------------------------------------
NET ASSETS consist of:
Paid-in capital $ 27,586 $ 1,099,861 $ 1,353,079 $ 3,540,666
Net unrealized appreciation in value of
investment securities, financial futures
contracts, and option contracts 3,381 629,430 184,726 130,483
----------------------------------------------------------
NET ASSETS $ 30,967 $ 1,729,291 $ 1,537,805 $ 3,671,149
----------------------------------------------------------
*Cost of investments:
Unaffiliated issuers $ 30,982 $ 1,066,195 $ 1,295,175 $ 3,631,440
Non-controlled affiliated issuers -- 36,348 101,463 --
----------------------------------------------------------
Total cost of investments $ 30,982 $ 1,102,543 $ 1,396,638 $ 3,631,440
----------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
C-32
<PAGE>
February 29, 2000 (Unaudited)
- ----------------------------------------------------------------------
<TABLE>
<CAPTION>
GLOBAL
MANAGERS
TRUST EQUITY MANAGERS TRUST
------------- ---------------------------------------------------------------------
SOCIALLY
INTERNATIONAL MANHATTAN MILLENNIUM PARTNERS REGENCY RESPONSIVE
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
<S> <C> <C> <C> <C> <C> <C>
-----------------------------------------------------------------------------------
ASSETS
Investments in securities, at market
value* (Notes A & E) -- see Schedule
of Investments:
Unaffiliated issuers $ 244,827 $ 1,444,708 $ 391,168 $ 3,025,463 $ 36,856 $ 130,004
Non-controlled affiliated
issuers -- -- -- -- -- --
-----------------------------------------------------------------------------------
244,827 1,444,708 391,168 3,025,463 36,856 130,004
Cash 11 6 12 -- -- 2
Dividends and interest receivable 248 961 172 5,152 34 99
Prepaid expenses and other assets 13 52 3 83 2 8
Receivable for option contracts
written -- -- -- -- -- --
Receivable for securities sold -- 7,935 6,029 18,768 417 2,454
Receivable for variation margin
(Note A) 14 -- -- -- -- --
-----------------------------------------------------------------------------------
245,113 1,453,662 397,384 3,049,466 37,309 132,567
-----------------------------------------------------------------------------------
LIABILITIES
Option contracts written, at market
value (Note A) -- -- -- -- -- --
Payable for collateral on securities
loaned (Note A) 11,604 219,243 43,223 101,395 1,245 2,215
Payable for securities purchased -- 6,476 11,088 272 915 2,375
Payable to investment manager
(Note B) 149 442 193 1,117 15 60
Accrued expenses and other payables 112 965 204 386 18 48
-----------------------------------------------------------------------------------
11,865 227,126 54,708 103,170 2,193 4,698
-----------------------------------------------------------------------------------
NET ASSETS Applicable to Investors'
Beneficial Interests $ 233,248 $ 1,226,536 $ 342,676 $ 2,946,296 $ 35,116 $ 127,869
-----------------------------------------------------------------------------------
NET ASSETS consist of:
Paid-in capital $ 121,202 $ 640,519 $ 216,186 $ 2,784,399 $ 33,418 $ 107,740
Net unrealized appreciation in value
of investment securities,
financial futures contracts, and
option contracts 112,046 586,017 126,490 161,897 1,698 20,129
-----------------------------------------------------------------------------------
NET ASSETS $ 233,248 $ 1,226,536 $ 342,676 $ 2,946,296 $ 35,116 $ 127,869
-----------------------------------------------------------------------------------
*Cost of investments:
Unaffiliated issuers $ 132,767 $ 858,691 $ 264,678 $ 2,863,566 $ 35,158 $ 109,875
Non-controlled affiliated issuers -- -- -- -- -- --
-----------------------------------------------------------------------------------
Total cost of investments $ 132,767 $ 858,691 $ 264,678 $ 2,863,566 $ 35,158 $ 109,875
-----------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
C-33
<PAGE>
STATEMENTS OF OPERATIONS
- ----------------------------------------------------------------------
<TABLE>
<CAPTION>
EQUITY MANAGERS TRUST
---------------------
CENTURY FOCUS
PORTFOLIO PORTFOLIO
For the
Period from
December 6, 1999 For the
(Commencement Six Months
of Operations) to Ended
February 29, February 29,
-------------------------------
2000 2000
(000'S OMITTED) (UNAUDITED) (UNAUDITED)
<S> <C> <C>
-------------------------------
INVESTMENT INCOME
Income:
Dividend income -- unaffiliated issuers $ 9 $ 5,920
Dividend income -- non-controlled affiliated issuers -- --
Interest income 36 292
Foreign taxes withheld (Note A) -- --
-------------------------------
Total income 45 6,212
-------------------------------
Expenses:
Investment management fee (Note B) 23 3,945
Accounting fees 2 5
Auditing fees 5 21
Custodian fees (Note B) 12 146
Insurance expense -- 10
Legal fees 5 12
Trustees' fees and expenses 2 12
Miscellaneous -- --
-------------------------------
Total expenses 49 4,151
Expenses reduced by custodian fee expense offset
arrangement (Note B) -- (4)
-------------------------------
Total net expenses 49 4,147
-------------------------------
Net investment income (loss) (4) 2,065
-------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain (loss) on investment securities sold in
unaffiliated issuers (9) 192,180
Net realized loss on investment securities sold in non-
controlled affiliated issuers -- --
Net realized loss on option contracts (Note A) -- (12)
Net realized loss on financial futures contracts (Note A) -- --
Net realized loss on foreign currency transactions (Note A) -- --
Change in net unrealized appreciation (depreciation) of
investment securities, financial futures contracts, option
contracts, and translation of assets and liabilities in
foreign currencies (Note A) 3,381 122,083
-------------------------------
Net gain (loss) on investments 3,372 314,251
-------------------------------
Net increase (decrease) in net assets resulting from
operations $ 3,368 $ 316,316
-------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
C-34
<PAGE>
- ----------------------------------------------------------------------
<TABLE>
<CAPTION>
GLOBAL
MANAGERS
EQUITY MANAGERS TRUST TRUST
--------------------------- -------------
GENESIS GUARDIAN INTERNATIONAL
PORTFOLIO PORTFOLIO PORTFOLIO
For the For the For the
Six Months Six Months Six Months
Ended Ended Ended
February 29, February 29, February 29,
2000 2000 2000
(UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C>
-----------------------------------------
INVESTMENT INCOME
Income:
Dividend income -- unaffiliated issuers $ 6,991 $ 25,244 $ 268
Dividend income -- non-controlled affiliated issuers 524 -- --
Interest income 2,139 8,022 344
Foreign taxes withheld (Note A) -- (122) (33)
-----------------------------------------
Total income 9,654 33,144 579
-----------------------------------------
Expenses:
Investment management fee (Note B) 5,806 9,727 690
Accounting fees 5 5 5
Auditing fees 20 24 16
Custodian fees (Note B) 163 328 113
Insurance expense 11 31 1
Legal fees 6 10 8
Trustees' fees and expenses 12 27 5
Miscellaneous 17 -- --
-----------------------------------------
Total expenses 6,040 10,152 838
Expenses reduced by custodian fee expense offset
arrangement (Note B) -- (5) --
-----------------------------------------
Total net expenses 6,040 10,147 838
-----------------------------------------
Net investment income (loss) 3,614 22,997 (259)
-----------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain (loss) on investment securities sold in
unaffiliated issuers 61,250 447,704 4,411
Net realized loss on investment securities sold in non-
controlled affiliated issuers (5,188) -- --
Net realized loss on option contracts (Note A) -- (88,477) --
Net realized loss on financial futures contracts (Note A) -- (5,940) (225)
Net realized loss on foreign currency transactions (Note A) -- -- (3)
Change in net unrealized appreciation (depreciation) of
investment securities, financial futures contracts, option
contracts, and translation of assets and liabilities in
foreign currencies (Note A) 43,805 (450,438) 77,160
-----------------------------------------
Net gain (loss) on investments 99,867 (97,151) 81,343
-----------------------------------------
Net increase (decrease) in net assets resulting from
operations $ 103,481 $ (74,154) $ 81,084
-----------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
C-35
<PAGE>
STATEMENTS OF OPERATIONS(Cont'd)
- ----------------------------------------------------------------------
<TABLE>
<CAPTION>
EQUITY MANAGERS TRUST
---------------------
MANHATTAN MILLENNIUM
PORTFOLIO PORTFOLIO
For the For the
Six Months Six Months
Ended Ended
February 29, February 29,
--------------------------
2000 2000
(000'S OMITTED) (UNAUDITED) (UNAUDITED)
<S> <C> <C>
--------------------------
INVESTMENT INCOME
Income:
Dividend income -- unaffiliated issuers $ 349 $ 4
Dividend income -- non-controlled affiliated issuers -- --
Interest income 1,145 370
Foreign taxes withheld (Note A) -- --
--------------------------
Total income 1,494 374
--------------------------
Expenses:
Investment management fee (Note B) 2,069 655
Accounting fees 5 5
Auditing fees 18 8
Custodian fees (Note B) 93 47
Insurance expense 4 --
Legal fees 8 11
Trustees' fees and expenses 7 3
Miscellaneous 11 3
--------------------------
Total expenses 2,215 732
Expenses reduced by custodian fee expense offset
arrangement (Note B) (1) (2)
--------------------------
Total net expenses 2,214 730
--------------------------
Net investment income (loss) (720) (356)
--------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain (loss) on investment securities sold in
unaffiliated issuers 92,655 24,399
Net realized loss on investment securities sold in non-
controlled affiliated issuers -- --
Net realized loss on option contracts (Note A) -- --
Net realized loss on financial futures contracts (Note A) -- --
Net realized loss on foreign currency transactions (Note A) -- --
Change in net unrealized appreciation (depreciation) of
investment securities, financial futures contracts, option
contracts, and translation of assets and liabilities in
foreign currencies (Note A) 463,683 120,373
--------------------------
Net gain (loss) on investments 556,338 144,772
--------------------------
Net increase (decrease) in net assets resulting from
operations $ 555,618 $ 144,416
--------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
C-36
<PAGE>
- ----------------------------------------------------------------------
<TABLE>
<CAPTION>
EQUITY MANAGERS TRUST
-----------------------------------------
SOCIALLY
PARTNERS REGENCY RESPONSIVE
PORTFOLIO PORTFOLIO PORTFOLIO
For the For the For the
Six Months Six Months Six Months
Ended Ended Ended
February 29, February 29, February 29,
2000 2000 2000
(UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C>
-----------------------------------------
INVESTMENT INCOME
Income:
Dividend income -- unaffiliated issuers $ 24,402 $ 166 $ 966
Dividend income -- non-controlled affiliated issuers -- -- --
Interest income 2,516 68 382
Foreign taxes withheld (Note A) (161) -- --
-----------------------------------------
Total income 26,757 234 1,348
-----------------------------------------
Expenses:
Investment management fee (Note B) 7,806 80 671
Accounting fees 5 5 5
Auditing fees 23 5 15
Custodian fees (Note B) 272 21 47
Insurance expense 24 -- 2
Legal fees 9 9 24
Trustees' fees and expenses 22 4 4
Miscellaneous -- -- --
-----------------------------------------
Total expenses 8,161 124 768
Expenses reduced by custodian fee expense offset
arrangement (Note B) (11) (3) (1)
-----------------------------------------
Total net expenses 8,150 121 767
-----------------------------------------
Net investment income (loss) 18,607 113 581
-----------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain (loss) on investment securities sold
in unaffiliated issuers 85,756 1,762 63,234
Net realized loss on investment securities sold in non-
controlled affiliated issuers -- -- --
Net realized loss on option contracts (Note A) -- -- --
Net realized loss on financial futures contracts
(Note A) -- -- --
Net realized loss on foreign currency transactions
(Note A) -- -- --
Change in net unrealized appreciation (depreciation) of
investment securities, financial futures contracts,
option contracts, and translation of assets and
liabilities in foreign currencies (Note A) (197,994) 2,216 (77,830)
-----------------------------------------
Net gain (loss) on investments (112,238) 3,978 (14,596)
-----------------------------------------
Net increase (decrease) in net assets resulting from
operations $ (93,631) $ 4,091 $ (14,015)
-----------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
C-37
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
- ----------------------------------------------------------------------
<TABLE>
<CAPTION>
EQUITY MANAGERS
TRUST
---------------------------------------------
CENTURY FOCUS
PORTFOLIO PORTFOLIO
Period from
December 6, 1999
(Commencement Six Months
of Operations) to Ended Year
February 29, February 29, Ended
2000 2000 AUGUST 31,
(000'S OMITTED) (UNAUDITED) (UNAUDITED) 1999
<S> <C> <C> <C>
---------------------------------------------
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss) $ (4) $ 2,065 $ 5,971
Net realized gain (loss) on investments (9) 192,168 203,107
Change in net unrealized appreciation (depreciation) of
investments 3,381 122,083 283,206
---------------------------------------------
Net increase (decrease) in net assets resulting from
operations 3,368 316,316 492,284
---------------------------------------------
TRANSACTIONS IN INVESTORS' BENEFICIAL INTERESTS:
Additions 27,703 45,385 50,568
Reductions (104) (178,808) (313,932)
---------------------------------------------
Net increase (decrease) in net assets resulting from
transactions in investors' beneficial interests 27,599 (133,423) (263,364)
---------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS 30,967 182,893 228,920
NET ASSETS:
Beginning of period -- 1,546,398 1,317,478
---------------------------------------------
End of period $ 30,967 $ 1,729,291 $ 1,546,398
---------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
C-38
<PAGE>
- ----------------------------------------------------------------------
<TABLE>
<CAPTION>
GLOBAL MANAGERS
EQUITY MANAGERS TRUST TRUST
-----------------------------------------------------------------------------
GENESIS GUARDIAN INTERNATIONAL
PORTFOLIO PORTFOLIO PORTFOLIO
Six Months Six Months Six Months
Ended Year Ended Year Ended Year
February 29, Ended February 29, Ended February 29, Ended
2000 August 31, 2000 August 31, 2000 August 31,
(UNAUDITED) 1999 (UNAUDITED) 1999 (UNAUDITED) 1999
<S> <C> <C> <C> <C> <C> <C>
-----------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss) $ 3,614 $ 18,739 $ 22,997 $ 60,087 $ (259) $ 96
Net realized gain (loss) on
investments 56,062 (110,390) 353,287 991,845 4,183 11,780
Change in net unrealized
appreciation (depreciation) of
investments 43,805 413,682 (450,438) 406,548 77,160 12,624
-----------------------------------------------------------------------------
Net increase (decrease) in net
assets resulting from operations 103,481 322,031 (74,154) 1,458,480 81,084 24,500
-----------------------------------------------------------------------------
TRANSACTIONS IN INVESTORS' BENEFICIAL
INTERESTS:
Additions 50,683 528,302 29,766 164,857 129,029 91,521
Reductions (367,463) (911,584) (1,008,183) (2,687,422) (91,381) (129,327)
-----------------------------------------------------------------------------
Net increase (decrease) in net
assets resulting from transactions
in investors' beneficial interests (316,780) (383,282) (978,417) (2,522,565) 37,648 (37,806)
-----------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS (213,299) (61,251) (1,052,571) (1,064,085) 118,732 (13,306)
NET ASSETS:
Beginning of period 1,751,104 1,812,355 4,723,720 5,787,805 114,516 127,822
-----------------------------------------------------------------------------
End of period $ 1,537,805 $ 1,751,104 $ 3,671,149 $ 4,723,720 $ 233,248 $ 114,516
-----------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
C-39
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS(Cont'd)
- ----------------------------------------------------------------------
<TABLE>
<CAPTION>
EQUITY MANAGERS TRUST
-----------------------------------------------------------
MILLENNIUM
MANHATTAN PORTFOLIO
PORTFOLIO Period from
Six Months Six Months October 20, 1998
Ended Year Ended (Commencement
February 29, Ended February 29, of Operations) to
2000 August 31, 2000 August 31,
(000'S OMITTED) (UNAUDITED) 1999 (UNAUDITED) 1999
<S> <C> <C> <C> <C>
-----------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss) $ (720) $ (502) $ (356) $ (186)
Net realized gain (loss) on investments 92,655 57,698 24,399 8,249
Change in net unrealized appreciation (depreciation) of
investments 463,683 135,208 120,373 6,117
-----------------------------------------------------------
Net increase (decrease) in net assets resulting from
operations 555,618 192,404 144,416 14,180
-----------------------------------------------------------
TRANSACTIONS IN INVESTORS' BENEFICIAL INTERESTS:
Additions 122,051 47,432 148,347 57,892
Reductions (63,992) (150,336) (18,324) (3,835)
-----------------------------------------------------------
Net increase (decrease) in net assets resulting from
transactions in investors' beneficial interests 58,059 (102,904) 130,023 54,057
-----------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS 613,677 89,500 274,439 68,237
NET ASSETS:
Beginning of period 612,859 523,359 68,237 --
-----------------------------------------------------------
End of period $ 1,226,536 $ 612,859 $ 342,676 $ 68,237
-----------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
C-40
<PAGE>
- ----------------------------------------------------------------------
<TABLE>
<CAPTION>
EQUITY MANAGERS TRUST
---------------------------------------------------------------------------------------
REGENCY SOCIALLY
PARTNERS PORTFOLIO RESPONSIVE
PORTFOLIO Period from PORTFOLIO
Six Months Six Months June 1, 1999 Six Months
Ended Year Ended (Commencement Ended Year
February 29, Ended February 29, of Operations) to February 29, Ended
2000 August 31, 2000 August 31, 2000 August 31,
(UNAUDITED) 1999 (UNAUDITED) 1999 (UNAUDITED) 1999
<S> <C> <C> <C> <C> <C> <C>
---------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss) $ 18,607 $ 51,968 $ 113 $ (7) $ 581 $ 2,271
Net realized gain (loss) on
investments 85,756 353,820 1,762 75 63,234 22,484
Change in net unrealized
appreciation (depreciation) of
investments (197,994) 531,136 2,216 (518) (77,830) 81,446
---------------------------------------------------------------------------------------
Net increase (decrease) in net
assets resulting from operations (93,631) 936,924 4,091 (450) (14,015) 106,201
---------------------------------------------------------------------------------------
TRANSACTIONS IN INVESTORS' BENEFICIAL
INTERESTS:
Additions 40,035 230,354 25,452 8,958 21,529 53,231
Reductions (768,848) (979,875) (2,705) (230) (276,758) (45,169)
---------------------------------------------------------------------------------------
Net increase (decrease) in net
assets resulting from transactions
in investors' beneficial interests (728,813) (749,521) 22,747 8,728 (255,229) 8,062
---------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS (822,444) 187,403 26,838 8,278 (269,244) 114,263
NET ASSETS:
Beginning of period 3,768,740 3,581,337 8,278 -- 397,113 282,850
---------------------------------------------------------------------------------------
End of period $ 2,946,296 $ 3,768,740 $ 35,116 $ 8,278 $ 127,869 $ 397,113
---------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
C-41
<PAGE>
NOTES TO FINANCIAL STATEMENTS
February 29, 2000 (Unaudited)
- ----------------------------------------------------------------------
Equity Managers Trust and Global Managers Trust
NOTE A -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
1) GENERAL: Neuberger Berman Century Portfolio ("Century"), Neuberger Berman
Focus Portfolio ("Focus"), Neuberger Berman Genesis Portfolio ("Genesis"),
Neuberger Berman Guardian Portfolio ("Guardian"), Neuberger Berman Manhattan
Portfolio ("Manhattan"), Neuberger Berman Millennium Portfolio
("Millennium"), Neuberger Berman Partners Portfolio ("Partners"), Neuberger
Berman Regency Portfolio ("Regency"), and Neuberger Berman Socially
Responsive Portfolio ("Socially Responsive") are separate operating series of
Equity Managers Trust ("Managers Trust"), a New York common law trust
organized as of December 1, 1992. Neuberger Berman International Portfolio
("International") is a separate operating series of Global Managers Trust
("Global"), a New York common law trust organized as of March 18, 1994, with
its principal office in the Cayman Islands. These ten aforementioned series
are collectively referred to as the "Portfolios." Managers Trust and Global
(collectively, the "Trusts") are registered as diversified, open-end
management investment companies under the Investment Company Act of 1940, as
amended (the "1940 Act"). Century, Millennium, and Regency had no operations
until December 6, 1999, October 20, 1998, and June 1, 1999, respectively,
other than matters relating to their organization and registration as series'
of Managers Trust. Other regulated investment companies sponsored by
Neuberger Berman Management Inc. ("Management"), whose financial statements
are not presented herein, also invest in the Trusts. Global currently has
only one Portfolio.
The assets of each Portfolio belong only to that Portfolio, and the
liabilities of each Portfolio are borne solely by that Portfolio and no
other.
2) PORTFOLIO VALUATION: Investment securities are valued as indicated in the
notes following the Portfolios' Schedule of Investments.
3) FOREIGN CURRENCY TRANSLATION: The accounting records of the Portfolios are
maintained in U.S. dollars. Foreign currency amounts are translated into U.S.
dollars at the current rate of exchange of such currency against the U.S.
dollar to determine the value of investments, other assets and liabilities.
Purchase and sale prices of securities, and income and expenses are
translated into U.S. dollars at the prevailing rate of exchange on the
respective dates of such transactions.
4) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities transactions are
recorded on a trade date basis. Dividend income is recorded on the
ex-dividend date or, for certain foreign dividends, as soon as the Portfolio
becomes aware of the dividends. Non-cash dividends included in dividend
income, if any, are
C-42
<PAGE>
recorded at the fair market value of the securities received. Interest
income, including accretion of original issue discount, where applicable, and
accretion of discount on short-term investments, is recorded on the accrual
basis. Realized gains and losses from securities transactions and foreign
currency transactions are recorded on the basis of identified cost.
5) TAXES: Managers Trust intends to comply with the requirements of the Internal
Revenue Code. Each Portfolio of the Trusts also intends to conduct its
operations so that each of its investors (in the case of Global, its U.S.
investors) will be able to qualify as a regulated investment company. Each
Portfolio will be treated as a partnership for U.S. Federal income tax
purposes and is therefore not subject to U.S. Federal income tax. There is,
at present, no direct taxation in the Cayman Islands, and therefore interest,
dividends, and capital gains derived by Global are not subject to taxes in
that jurisdiction.
6) FOREIGN TAXES: Foreign taxes withheld represent amounts withheld by foreign
tax authorities, net of refunds recoverable.
7) EXPENSE ALLOCATION: Each Portfolio bears all costs of its operations.
Expenses incurred by each of the Trusts with respect to any two or more
Portfolios are allocated in proportion to the net assets of such Portfolios,
except where a more appropriate allocation of expenses to each Portfolio can
otherwise be made fairly. Expenses directly attributable to a Portfolio are
charged to that Portfolio.
8) CALL OPTIONS: Premiums received by each Portfolio upon writing a covered call
option are recorded in the liability section of each Portfolio's Statement of
Assets and Liabilities and are subsequently adjusted to the current market
value. When an option is exercised, closed, or expired, the Portfolio
realizes a gain or loss and the liability is eliminated. A Portfolio bears
the risk of a decline in the price of the security during the period,
although any potential loss during the period would be reduced by the amount
of the option premium received. In general, written covered call options may
serve as a partial hedge against decreases in value in the underlying
securities to the extent of the premium received. All securities covering
outstanding options are held in escrow by the custodian bank.
Summary of option transactions for the six months ended February 29, 2000:
<TABLE>
<CAPTION>
VALUE
WHEN
FOCUS NUMBER WRITTEN
<S> <C> <C>
- ------------------------------------------------------------
CONTRACTS OUTSTANDING 8/31/99 3,000 $ 441,000
CONTRACTS WRITTEN 1,000 434,000
CONTRACTS EXPIRED (1,000) (145,000)
CONTRACTS EXERCISED 0 0
CONTRACTS CLOSED (3,000) (730,000)
-----------------------
CONTRACTS OUTSTANDING 2/29/00 0 $ 0
-----------------------
</TABLE>
C-43
<PAGE>
<TABLE>
<CAPTION>
VALUE
WHEN
GUARDIAN NUMBER WRITTEN
<S> <C> <C>
- -----------------------------------------------------------------
CONTRACTS OUTSTANDING 8/31/99 23,750 $ 15,446,000
CONTRACTS WRITTEN 67,676 66,353,000
CONTRACTS EXPIRED (500) (2,985,000)
CONTRACTS EXERCISED (3,769) (1,754,000)
CONTRACTS CLOSED (83,042) (74,278,000)
----------------------------
CONTRACTS OUTSTANDING 2/29/00 4,115 $ 2,782,000
----------------------------
</TABLE>
9) FINANCIAL FUTURES CONTRACTS: Each Portfolio may buy and sell stock index
futures contracts for purposes of managing cash flow. Century, International,
Millennium, and Socially Responsive may each buy and sell financial futures
contracts to hedge against a possible decline in the value of their portfolio
securities. International may also buy currency futures contracts for
non-hedging purposes. At the time a Portfolio enters into a financial futures
contract, it is required to deposit with its custodian a specified amount of
cash or liquid securities, known as "initial margin," ranging upward from
1.1% of the value of the financial futures contract being traded. Each day,
the futures contract is valued at the official settlement price of the board
of trade or U.S. commodity exchange on which such futures contract is traded.
Subsequent payments, known as "variation margin," to and from the broker are
made on a daily basis as the market price of the financial futures contract
fluctuates. Daily variation margin adjustments, arising from this "mark to
market," are recorded by the Portfolios as unrealized gains or losses.
Although some financial futures contracts by their terms call for actual
delivery or acceptance of financial instruments, in most cases the contracts
are closed out prior to delivery by offsetting purchases or sales of matching
financial futures contracts. When the contracts are closed, a Portfolio
recognizes a gain or loss. Risks of entering into futures contracts include
the possibility there may be an illiquid market and/or a change in the value
of the contract may not correlate with changes in the value of the underlying
securities.
For U.S. Federal income tax purposes, the futures transactions undertaken
by a Portfolio may cause that Portfolio to recognize gains or losses from
marking to market even though its positions have not been sold or terminated,
may affect the character of the gains or losses recognized as long-term or
short-term, and may affect the timing of some capital gains and losses
realized by the Portfolios. Also, a Portfolio's losses on transactions
involving futures contracts may be deferred rather than being taken into
account currently in calculating such Portfolio's taxable income.
C-44
<PAGE>
During the period ended February 29, 2000, Century, Focus, Genesis,
Manhattan, Millennium, Partners, Regency, and Socially Responsive did not
enter into any financial futures contracts.
During the six months ended February 29, 2000, Guardian had entered into
various financial futures contracts. At February 29, 2000, there were no open
positions.
At February 29, 2000, open positions in financial futures contracts for
International were as follows:
<TABLE>
<CAPTION>
UNREALIZED
EXPIRATION OPEN CONTRACTS POSITION DEPRECIATION
<S> <C> <C> <C>
- -----------------------------------------------------------------------
March 2000 50 SGX Taiwan IX Futures Long $10,000
</TABLE>
At February 29, 2000, International had the following securities deposited in
a segregated account to cover margin requirements on open financial futures
contracts:
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT SECURITY
<S> <C>
- ------------------------------------------------------------
$250,000 Freddie Mac, Discount Notes, 5.69%, due 3/29/2000
</TABLE>
10) SECURITY LENDING: Securities loans involve certain risks in the event a
borrower should fail financially, including delays or inability to recover
the lent securities or foreclose against the collateral. The investment
manager, under the general supervision of the Trusts' Boards of Trustees,
monitors the creditworthiness of the parties to whom the Portfolios make
security loans. The Portfolios will not lend securities on which covered
call options have been written, or lend securities on terms which would
prevent each of their investors from qualifying as a regulated investment
company. The Portfolios entered into a Securities Lending Agreement with
Morgan Stanley & Co. Incorporated ("Morgan"). The Portfolios receive cash
collateral equal to at least 100% of the current market value of the loaned
securities. The Portfolios invest the cash collateral in the N&B Securities
Lending Quality Fund, LLC ("investment vehicle"), which is managed by State
Street Bank and Trust Company ("State Street") pursuant to guidelines
approved by the Trusts' investment manager. Income earned on the investment
vehicle is paid to Morgan monthly. The Portfolios receive a fee, payable
monthly, negotiated by the
C-45
<PAGE>
Portfolios and Morgan, based on the number and duration of the lending
transactions. At February 29, 2000, the value of the securities loaned and
the value of the collateral were as follows:
<TABLE>
<CAPTION>
VALUE OF
SECURITIES VALUE OF
LOANED COLLATERAL
<S> <C> <C>
- -------------------------------------------------------------------
CENTURY $ 2,444,000 $ 2,493,000
FOCUS 6,756,000 6,891,000
GENESIS 46,586,000 47,518,000
GUARDIAN 57,176,000 58,320,000
INTERNATIONAL 11,377,000 11,604,000
MANHATTAN 214,944,000 219,243,000
MILLENNIUM 42,375,000 43,223,000
PARTNERS 99,406,000 101,395,000
REGENCY 1,221,000 1,245,000
SOCIALLY RESPONSIVE 2,172,000 2,215,000
</TABLE>
11) REPURCHASE AGREEMENTS: Each Portfolio may enter into repurchase agreements
with institutions that the Portfolio's investment manager has determined are
creditworthy. Each repurchase agreement is recorded at cost. A Portfolio
requires that the securities purchased in a repurchase transaction be
transferred to the custodian in a manner sufficient to enable a Portfolio to
obtain those securities in the event of a default under the repurchase
agreement. A Portfolio monitors, on a daily basis, the value of the
securities transferred to ensure that their value, including accrued
interest, is greater than amounts owed to a Portfolio under each such
repurchase agreement.
NOTE B -- MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES:
Each Portfolio retains Management as its investment manager under a
Management Agreement. For such investment management services, each Portfolio
(except Genesis, International, and Millennium) pays Management a fee at the
annual rate of 0.55% of the first $250 million of that Portfolio's average daily
net assets, 0.525% of the next $250 million, 0.50% of the next $250 million,
0.475% of the next $250 million, 0.45% of the next $500 million, and 0.425% of
average daily net assets in excess of $1.5 billion. Genesis and Millennium pay
Management a fee for investment management services at the annual rate of 0.85%
of the first $250 million of that Portfolio's average daily net assets, 0.80% of
the next $250 million, 0.75% of the next $250 million, 0.70% of the next
$250 million, and 0.65% of average daily net assets in excess of $1 billion.
International pays Management a fee for investment management services at the
annual rate of 0.85% of the first $250 million of that Portfolio's average daily
net
C-46
<PAGE>
assets, 0.825% of the next $250 million, 0.80% of the next $250 million, 0.775%
of the next $250 million, 0.75% of the next $500 million, and 0.725% of average
daily net assets in excess of $1.5 billion.
Management and Neuberger Berman, LLC ("Neuberger"), a member firm of The New
York Stock Exchange and sub-adviser to each Portfolio, are wholly owned
subsidiaries of Neuberger Berman Inc., a publicly held company. Neuberger is
retained by Management to furnish it with investment recommendations and
research information without added cost to each Portfolio. Several individuals
who are officers and/or trustees of the Trusts are also employees of Neuberger
and/or Management.
Each Portfolio has an expense offset arrangement in connection with its
custodian contract. The impact of this arrangement, reflected in the Statements
of Operations under the caption Custodian fees, was a reduction of $467, $4,333,
$149, $5,260, $499, $885, $2,294, $10,625, $2,597, and $613, for Century, Focus,
Genesis, Guardian, International, Manhattan, Millennium, Partners, Regency, and
Socially Responsive, respectively.
NOTE C -- SECURITIES TRANSACTIONS:
During the period ended February 29, 2000, there were purchase and sale
transactions (excluding short-term securities, financial futures contracts, and
option contracts) as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
<S> <C> <C>
- -------------------------------------------------------------------
CENTURY $ 28,844,000 $ 3,045,000
FOCUS 381,851,000 479,210,000
GENESIS 211,484,000 546,464,000
GUARDIAN 1,725,279,000 2,231,751,000
INTERNATIONAL 47,152,000 24,545,000
MANHATTAN 426,433,000 395,770,000
MILLENNIUM 242,490,000 111,566,000
PARTNERS 1,678,989,000 2,225,081,000
REGENCY 41,276,000 18,795,000
SOCIALLY RESPONSIVE 94,888,000 326,423,000
</TABLE>
C-47
<PAGE>
During the period ended February 29, 2000, there were brokerage commissions
on securities paid to Neuberger and other brokers as follows:
<TABLE>
<CAPTION>
OTHER
NEUBERGER BROKERS TOTAL
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------
CENTURY $ 10,000 $ 3,000 $ 13,000
FOCUS 414,000 371,000 785,000
GENESIS 410,000 551,000 961,000
GUARDIAN 2,671,000 1,977,000 4,648,000
INTERNATIONAL -- 170,000 170,000
MANHATTAN 132,000 301,000 433,000
MILLENNIUM 28,000 25,000 53,000
PARTNERS 280,000 81,000 361,000
REGENCY 52,000 40,000 92,000
SOCIALLY RESPONSIVE 180,000 82,000 262,000
</TABLE>
NOTE D -- LINE OF CREDIT:
At February 29, 2000, Genesis, Manhattan, and Millennium were three of the
holders of a single committed, unsecured $100,000,000 line of credit with State
Street, to be used only for temporary or emergency purposes. Interest is charged
on borrowings under this agreement at the overnight Federal Funds Rate plus
0.75% per annum. A facility fee of 0.09% (0.07% prior to October 1, 1999) per
annum of the available line of credit is charged, of which Genesis, Manhattan,
and Millennium each has agreed to pay its pro rata share, based on the ratio of
its individual net assets to the net assets of all the participants at the time
the fee is due and payable. The fee is paid quarterly in arrears. No
compensating balance is required. Other investment companies managed by
Management also participate in this line of credit on the same terms. Because
several investment companies participate, there is no assurance that an
individual Portfolio will have access to the entire $100,000,000 at any
particular time. Genesis, Manhattan, and Millennium had no loans outstanding
pursuant to this line of credit at February 29, 2000. During the six months
ended February 29, 2000, Genesis, Manhattan, and Millennium did not utilize this
line of credit.
At February 29, 2000, International was one of two holders of a single
$20,000,000 uncommitted, secured line of credit with State Street to be used for
temporary or emergency purposes or for leverage. Interest is charged at LIBOR,
or the overnight Federal Funds Rate, plus a spread to be determined at the time
of borrowing. Another investment company managed by Management also participates
in this line of credit on the same terms. Because another investment company
participates, there is no assurance that an individual Portfolio will have
access to the
C-48
<PAGE>
entire $20,000,000 at any particular time. International had no loans
outstanding pursuant to this line of credit at February 29, 2000, nor had it
utilized this line of credit at any time prior to that date.
NOTE E -- INVESTMENTS IN NON-CONTROLLED AFFILIATES*:
<TABLE>
<CAPTION>
FOCUS
BALANCE OF GROSS GROSS BALANCE OF
SHARES HELD PURCHASES SALES SHARES HELD VALUE
AUGUST 31, AND AND FEBRUARY 29, FEBRUARY 29,
NAME OF ISSUER: 1999 ADDITIONS REDUCTIONS 2000 2000
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Furniture Brands International 1,800,000 793,000 0 2,593,000 $41,650,000
Photronics Inc.** 1,302,500 0 797,500 505,000 21,494,000
</TABLE>
<TABLE>
<CAPTION>
GENESIS
BALANCE OF GROSS GROSS BALANCE OF
SHARES HELD PURCHASES SALES SHARES HELD VALUE
AUGUST 31, AND AND FEBRUARY 29, FEBRUARY 29,
NAME OF ISSUER: 1999 ADDITIONS REDUCTIONS 2000 2000
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
AAR Corp. 1,771,350 0 406,400 1,364,950 $32,418,000
Alliant Techsystems 663,200 0 118,000 545,200 29,509,000
Aviall Inc.** 1,219,500 0 432,300 787,200 6,445,000
Davox Corp.** 1,075,600 0 601,400 474,200 18,138,000
DONCASTERS PLC ADR** 478,300 0 478,300 0 0
Highland Bancorp 331,400 0 0 331,400 5,468,000
Primex Technologies 800,400 0 76,700 723,700 15,198,000
SOS Staffing Services 814,400 0 25,000 789,400 3,947,000
Scottish Annuity & Life Holdings 857,900 33,600 0 891,500 7,076,000
</TABLE>
*AFFILIATED ISSUERS, AS DEFINED IN THE 1940 ACT, INCLUDE ISSUERS IN WHICH THE
PORTFOLIO HELD 5% OR MORE OF THE OUTSTANDING VOTING SECURITIES.
**AT FEBRUARY 29, 2000, THE ISSUERS OF THESE SECURITIES WERE NO LONGER
AFFILIATED WITH THE PORTFOLIO.
NOTE F -- UNAUDITED FINANCIAL INFORMATION:
The financial information included in this interim report is taken from the
records of each Portfolio without audit by independent accountants/auditors.
Annual reports contain audited financial statements.
C-49
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger Berman
- --------------------------------------------------------------------------------
Century Portfolio
<TABLE>
<CAPTION>
Period from
December 6, 1999(1)
to February 29,
2000
(UNAUDITED)
<S> <C>
-------------------
RATIOS TO AVERAGE NET ASSETS:
Gross Expenses(2)(3) 1.17%
-------------------
Net Expenses(3) 1.16%
-------------------
Net Investment Loss(3) (.10%)
-------------------
Portfolio Turnover Rate 20%
-------------------
Net Assets, End of Period (in millions) $31.0
-------------------
</TABLE>
1) The date investment operations commenced.
2) The Portfolio is required to calculate an expense ratio without taking into
consideration any expense reductions related to expense offset arrangements.
3) Annualized.
C-50
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger Berman
- --------------------------------------------------------------------------------
Focus Portfolio
<TABLE>
<CAPTION>
Six Months
Ended
February 29,
2000 Year Ended August 31,
(UNAUDITED) 1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C> <C>
-----------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
Gross Expenses(1) .51%(2) .51% .51% .53% .54% --
-----------------------------------------------------------------------------
Net Expenses .51%(2) .51% .51% .53% .54% .57%
-----------------------------------------------------------------------------
Net Investment Income .25%(2) .37% .59% .54% 1.04% 1.05%
-----------------------------------------------------------------------------
Portfolio Turnover Rate 23% 57% 64% 63% 39% 36%
-----------------------------------------------------------------------------
Net Assets, End of Period (in millions) $1,729.3 $1,546.4 $1,317.5 $1,573.4 $1,122.4 $969.2
-----------------------------------------------------------------------------
</TABLE>
1) For fiscal periods ending after September 1, 1995, the Portfolio is required
to calculate an expense ratio without taking into consideration any expense
reductions related to expense offset arrangements.
2) Annualized.
C-51
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger Berman
- --------------------------------------------------------------------------------
Genesis Portfolio
<TABLE>
<CAPTION>
Six Months
Ended
February 29,
2000 Year Ended August 31,
(UNAUDITED) 1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C> <C>
----------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
Gross Expenses(1) .76%(2) .75% .72% .77% .85% --
----------------------------------------------------------------------
Net Expenses .76%(2) .75% .72%(3) .77%(3) .85%(3) .94%(3)
----------------------------------------------------------------------
Net Investment Income .45%(2) 1.02% 1.13% .32% .27% .25%
----------------------------------------------------------------------
Portfolio Turnover Rate 14% 33% 18% 18% 21% 37%
----------------------------------------------------------------------
Net Assets, End of Period (in millions) $1,537.8 $1,751.1 $1,812.4 $1,083.7 $259.9 $142.2
----------------------------------------------------------------------
</TABLE>
1) For fiscal periods ending after September 1, 1995, the Portfolio is required
to calculate an expense ratio without taking into consideration any expense
reductions related to expense offset arrangements.
2) Annualized.
3) Had the investment manager not waived a portion of the management fee, the
annualized ratios of net expenses to average daily net assets would have
been:
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31,
1998 1997 1996 1995
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------
Net Expenses .74% .87% .95% .97%
</TABLE>
C-52
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger Berman
- --------------------------------------------------------------------------------
Guardian Portfolio
<TABLE>
<CAPTION>
Six Months
Ended
February 29,
2000 Year Ended August 31,
(UNAUDITED) 1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C> <C>
-----------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
Gross Expenses(1) .47%(2) .46% .46% .46% .46% --
-----------------------------------------------------------------------------
Net Expenses .47%(2) .46% .46% .46% .46% .48%
-----------------------------------------------------------------------------
Net Investment Income 1.06%(2) 1.06% .92% .89% 1.72% 1.72%
-----------------------------------------------------------------------------
Portfolio Turnover Rate 42% 73% 60% 50% 37% 26%
-----------------------------------------------------------------------------
Net Assets, End of Period (in millions) $3,671.1 $4,723.7 $5,787.8 $8,758.2 $6,232.5 $4,613.2
-----------------------------------------------------------------------------
</TABLE>
1) For fiscal periods ending after September 1, 1995, the Portfolio is required
to calculate an expense ratio without taking into consideration any expense
reductions related to expense offset arrangements.
2) Annualized.
C-53
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger Berman
- --------------------------------------------------------------------------------
International Portfolio
<TABLE>
<CAPTION>
Six Months
Ended
February 29,
2000 Year Ended August 31,
(UNAUDITED) 1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C> <C>
-------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
Gross Expenses(1) 1.03%(2) 1.11% 1.18% 1.21% 1.37% --
-------------------------------------------------------------------
Net Expenses 1.03%(2) 1.10% 1.18% 1.21% 1.37%(3) .70%(3)
-------------------------------------------------------------------
Net Investment Income (Loss) (.32%)(2) .08% .29% .47% .58% 1.74%
-------------------------------------------------------------------
Portfolio Turnover Rate 16% 94% 46% 37% 45% 41%
-------------------------------------------------------------------
Net Assets, End of Period (in millions) $233.2 $114.5 $127.8 $115.3 $57.0 $26.4
-------------------------------------------------------------------
</TABLE>
1) For fiscal periods ending after September 1, 1995, the Portfolio is required
to calculate an expense ratio without taking into consideration any expense
reductions related to expense offset arrangements.
2) Annualized.
3) After reimbursement of expenses by the investment adviser. Had the investment
adviser not undertaken such action, the annualized ratios of net expenses to
average daily net assets would have been:
<TABLE>
<CAPTION>
YEAR ENDED
AUGUST 31,
1996 1995
<S> <C> <C>
- ----------------------------------------------------
Net Expenses 1.49% 2.24%
</TABLE>
C-54
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger Berman
- --------------------------------------------------------------------------------
Manhattan Portfolio
<TABLE>
<CAPTION>
Six Months
Ended
February 29,
2000 Year Ended August 31,
(UNAUDITED) 1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C> <C>
-------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
Gross Expenses(1) .56%(2) .58% .57% .59% .58% --
-------------------------------------------------------------------
Net Expenses .56%(2) .58% .57% .59% .58% .59%
-------------------------------------------------------------------
Net Investment Income (Loss) (.18%)(2) (.08%) (.05%) .20% .13% .42%
-------------------------------------------------------------------
Portfolio Turnover Rate 51% 115% 90% 89% 53% 44%
-------------------------------------------------------------------
Net Assets, End of Period (in millions) $1,226.5 $612.9 $523.4 $621.7 $567.4 $645.4
-------------------------------------------------------------------
</TABLE>
1) For fiscal periods ending after September 1, 1995, the Portfolio is required
to calculate an expense ratio without taking into consideration any expense
reductions related to expense offset arrangements.
2) Annualized.
C-55
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger Berman
- --------------------------------------------------------------------------------
Millennium Portfolio
<TABLE>
<CAPTION>
Six Months
Ended Period from
February 29, October 20, 1998(1)
2000 to August 31,
(UNAUDITED) 1999
<S> <C> <C>
-----------------------------------
RATIOS TO AVERAGE NET ASSETS:
Gross Expenses(2)(3) .95% 1.20%
-----------------------------------
Net Expenses(3) .95% 1.19%
-----------------------------------
Net Investment Loss(3) (.46%) (.67%)
-----------------------------------
Portfolio Turnover Rate 71% 208%
-----------------------------------
Net Assets, End of Period (in millions) $342.7 $68.2
-----------------------------------
</TABLE>
1) The date investment operations commenced.
2) The Portfolio is required to calculate an expense ratio without taking into
consideration any expense reductions related to expense offset arrangements.
3) Annualized.
C-56
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger Berman
- --------------------------------------------------------------------------------
Partners Portfolio
<TABLE>
<CAPTION>
Six Months
Ended
February 29,
2000 Year Ended August 31,
(UNAUDITED) 1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C> <C>
-----------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
Gross Expenses(1) .47%(2) .47% .47% .48% .51% --
-----------------------------------------------------------------------------
Net Expenses .47%(2) .47% .47% .48% .51% .53%
-----------------------------------------------------------------------------
Net Investment Income 1.08%(2) 1.29% 1.11% 1.05% 1.26% 1.13%
-----------------------------------------------------------------------------
Portfolio Turnover Rate 50% 132% 109% 77% 96% 98%
-----------------------------------------------------------------------------
Net Assets, End of Period (in millions) $2,946.3 $3,768.7 $3,581.3 $3,575.6 $1,999.6 $1,623.5
-----------------------------------------------------------------------------
</TABLE>
1) For fiscal periods ending after September 1, 1995, the Portfolio is required
to calculate an expense ratio without taking into consideration any expense
reductions related to expense offset arrangements.
2) Annualized.
C-57
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger Berman
- --------------------------------------------------------------------------------
Regency Portfolio
<TABLE>
<CAPTION>
Six Months
Ended Period from
February 29, June 1, 1999(1)
2000 to August 31,
(UNAUDITED) 1999
<S> <C> <C>
-------------------------------
RATIOS TO AVERAGE NET ASSETS:
Gross Expenses(2)(3) .84% 2.65%
-------------------------------
Net Expenses(3) .82% 2.64%
-------------------------------
Net Investment Income (Loss)(3) .77% (.48%)
-------------------------------
Portfolio Turnover Rate 68% 42%
-------------------------------
Net Assets, End of Period (in millions) $35.1 $8.3
-------------------------------
</TABLE>
1) The date investment operations commenced.
2) The Portfolio is required to calculate an expense ratio without taking into
consideration any expense reductions related to expense offset arrangements.
3) Annualized.
C-58
<PAGE>
FINANCIAL HIGHLIGHTS
Neuberger Berman
- --------------------------------------------------------------------------------
Socially Responsive Portfolio
<TABLE>
<CAPTION>
Six Months
Ended
February 29,
2000 Year Ended August 31,
(UNAUDITED) 1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C> <C>
-------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
Gross Expenses(1) .63%(2) .59% .60% .63% .65% --
-------------------------------------------------------------------
Net Expenses .63%(2) .59% .60% .63% .65% .68%
-------------------------------------------------------------------
Net Investment Income .48%(2) .63% .92% 1.08% 1.02% 1.18%
-------------------------------------------------------------------
Portfolio Turnover Rate 41% 53% 47% 51% 53% 58%
-------------------------------------------------------------------
Net Assets, End of Period (in millions) $127.9 $397.1 $282.9 $256.3 $158.5 $96.7
-------------------------------------------------------------------
</TABLE>
1) For fiscal periods ending after September 1, 1995, the Portfolio is required
to calculate an expense ratio without taking into consideration any expense
reductions related to expense offset arrangements.
2) Annualized.
C-59
<PAGE>
DIRECTORY
INVESTMENT MANAGER, ADMINISTRATOR
AND DISTRIBUTOR
Neuberger Berman Management Inc.
605 Third Avenue 2nd Floor
New York, NY 10158-0180
800.877.9700 or 212.476.8800
Institutional Services 800.366.6264
SUB-ADVISER
Neuberger Berman, LLC
605 Third Avenue
New York, NY 10158-3698
CUSTODIAN AND SHAREHOLDER
SERVICING AGENT
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
ADDRESS CORRESPONDENCE TO:
Neuberger Berman Funds
Boston Service Center
P.O. Box 8403
Boston, MA 02266-8403
LEGAL COUNSEL
Kirkpatrick & Lockhart LLP
1800 Massachusetts Avenue, NW
2nd Floor
Washington, DC 20036-1800
- -C- 2000 Neuberger Berman Management Inc.
D-1
<PAGE>
OFFICERS AND TRUSTEES
EQUITY MANAGERS TRUST/
NEUBERGER BERMAN EQUITY FUNDS
Peter E. Sundman
CHAIRMAN OF THE BOARD AND TRUSTEE
Michael M. Kassen
PRESIDENT AND TRUSTEE
Faith Colish
TRUSTEE
Howard A. Mileaf
TRUSTEE
Edward I. O'Brien
TRUSTEE
John T. Patterson, Jr.
TRUSTEE
John P. Rosenthal
TRUSTEE
Cornelius T. Ryan
TRUSTEE
Gustave H. Shubert
TRUSTEE
Daniel J. Sullivan
VICE PRESIDENT
Michael J. Weiner
VICE PRESIDENT
Richard Russell
TREASURER
Claudia A. Brandon
SECRETARY
Barbara DiGiorgio
ASSISTANT TREASURER
Celeste Wischerth
ASSISTANT TREASURER
Stacy Cooper-Shugrue
ASSISTANT SECRETARY
C. Carl Randolph
ASSISTANT SECRETARY
GLOBAL MANAGERS TRUST
Peter E. Sundman
CHAIRMAN OF THE BOARD AND TRUSTEE
Michael M. Kassen
PRESIDENT
Howard A. Mileaf
TRUSTEE
John T. Patterson, Jr.
TRUSTEE
John P. Rosenthal
TRUSTEE
Daniel J. Sullivan
VICE PRESIDENT
Michael J. Weiner
VICE PRESIDENT
Richard Russell
TREASURER
Claudia A. Brandon
SECRETARY
Barbara DiGiorgio
ASSISTANT TREASURER
Jacqueline Henning
ASSISTANT TREASURER
Celeste Wischerth
ASSISTANT TREASURER
Stacy Cooper-Shugrue
ASSISTANT SECRETARY
Lenore Joan McCabe
ASSISTANT SECRETARY
C. Carl Randolph
ASSISTANT SECRETARY
D-2
<PAGE>
Statistics and projections in this report are derived from sources
deemed to be reliable but cannot be regarded as a representation of
future results of the Funds. This report is prepared for the
general information of shareholders and is not an offer of shares
of the Funds. Shares are sold only through the currently
effective prospectus, which must precede or accompany this report.
NEUBERGER BERMAN
NEUBERGER BERMAN MANAGEMENT INC.
605 Third Avenue 2nd Floor
New York, NY 10158-0180
SHAREHOLDER SERVICES
800.877.9700
INSTITUTIONAL SERVICES
800.366.6264
WWW.NBFUNDS.COM
[LOGO] PRINTED ON RECYCLED PAPER A0057 04/00
